German Unions Counter Pension Commission with Higher Payouts and a Hard No to Later Retirement

The German Trade Union Federation (DGB) fired back Friday at the government-appointed pension commission, unveiling a rival plan that demands significantly higher benefits and flatly rejects raising the retirement age. The proposal sets up a sharp clash just days before a key coalition summit.

At the core of the DGB's blueprint is a call to boost the statutory pension level from its current 48 percent to 53 percent in stages — 50 percent first, then the final target. The ultimate ambition goes further: pensions should replace 70 to 90 percent of a worker's last net income, a radical departure from the commission's more cautious line.

To fund the expansion, the DGB wants employers to pay a mandatory 2 percent of gross wages into occupational pension plans. The statutory pension system itself would be shored up through slightly higher contributions and a new "demographic supplement" from the federal budget. That supplement, the unions say, should be financed by higher taxes on top incomes, wealth, and capital gains. Another pillar of the proposal is broadening the contributor pool to include the self-employed, politicians, and corporate executives — a so-called "Erwerbstätigenversicherung" (insurance for all working people).

"Rente mit 63" Under Fire

The DGB's offensive is a direct response to the commission's recommendations, delivered Tuesday. The experts proposed linking the retirement age to life expectancy — calculations suggest that children aged four today could have to work until 70. The commission also recommended scrapping the "Rente mit 63," the popular scheme allowing workers with 45 contribution years to retire without deductions.

DGB chairwoman Yasmin Fahimi had already rejected the commission's proposals Wednesday, calling the debate over longer working lives "unsachlich" (unobjective) and demanding better workplace conditions instead. Industrial unions IG Metall and Verdi warn that axing early retirement options would push many into old-age poverty.

The controversy over the "Rente mit 63" remains one of the most emotive issues. The unions insist it must stay, while the commission sees its abolition as essential given the labour shortage.

Capital Pension: The Flashpoint

A mandatory capital-funded pension — modelled on Sweden's system — is another fault line. The commission wants to start in 2028 with 1 percent of gross wages invested in equities, rising to 2 percent later. The DGB rejects embedding such a capital element inside the statutory pension, arguing it belongs instead within occupational schemes.

Employer reaction has been mixed. BDA managing director Steffen Kampeter praised the commission's "political courage" but criticised the "forced capital pension" as costly and also opposed the recommended dismantling of minijobs. The OECD, by contrast, welcomed exactly those proposals, calling limits on minijobs and an end to penalty-free early retirement appropriate for a time of acute skills shortages.

Urgent Political Calendar

The dispute will dominate the coming days. A coalition committee is scheduled for July 1, and SPD co-chair Saskia Esken is pushing for legislation to be passed before the year ends. But research institutes IMK and WSI have urged caution, warning that building a capital stock from 2028 could suppress economic growth. They also project that contribution rates could climb to 22 percent by 2032 — further complicating the government’s already difficult fiscal arithmetic.

en | boerse | 69629907 |