German Pension Reform Plan Targets 6.8 Million Minijobbers, Igniting Coalition and Business Backlash

Chancellor Friedrich Merz has pledged to implement all 33 proposals from the country’s pension commission, a package that includes scrapping the special social-insurance status for Germany’s 6.8 million minijob holders. The recommendation, delivered to Merz and Bundestag President Bärbel Bas on June 24, has already split the governing coalition and drawn fierce opposition from employer groups.

The commission wants to require nearly all minijobbers to pay full contributions to the statutory pension system. The only exception currently planned is for school pupils. Students and pensioners working side jobs would also lose their exemption. According to the report, 6.55 million of the affected workers are employed in commercial settings, while roughly 252,000 clean private households. Women make up 55.9 percent of minijobbers, and foreign nationals account for 18.3 percent.

A sample calculation from the commission illustrates the immediate cost: someone earning €603 per month would face total deductions of €130.73. That breaks down into 9.3 percent for pensions, 8.75 percent for health insurance, 2.4 percent for long-term care, and 1.2 percent for unemployment insurance. In the first quarter of 2026 alone, minijobbers already paid €1.3 billion into the pension fund and €1.02 billion into health insurance.

Political reaction has been split along predictable lines. Merz wants the entire package enacted. Bavarian Premier Markus Söder warned that abolishing the minijob status could destroy the model entirely. The SPD, Left Party, and Greens support the plan. The AfD, by contrast, is calling for an expansion of the current system.

Business associations reacted sharply. The German Hotel and Restaurant Association described the proposal as a “catastrophe” that would threaten the very existence of many businesses. The Retail Association and the Confederation of German Employers’ Associations also came out against it. Union and social-welfare groups welcomed the pension integration as protection against old-age poverty, though DGB chairwoman Yasmin Fahimi criticized other parts of the report, particularly the planned elimination of penalty-free early retirement.

Beyond the minijob overhaul, the commission’s report contains several far-reaching recommendations:

• Capital pension: Starting in 2028, between 1 and 2 percent of wages would gradually be diverted into funded retirement accounts.
• Retirement age: From 2032, the statutory retirement age would be indexed to life expectancy. Under this formula, children born today could face a retirement age of 70.
• Expanded coverage: Self-employed workers, civil servants, members of parliament, and corporate executives would also have to contribute to the public pension system.
• Pension level: The commission proposes guaranteeing a net replacement rate of 50 percent from 2040 onward.

Research institutes including IMK and WSI have warned that the reforms could cost up to 250,000 jobs. The first legislative drafts are expected in autumn 2026, with the minijob changes potentially taking effect in 2027 or 2028. Bas stressed that the most important measures should be implemented before the end of the year.

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