Germany’s Pension Overhaul: Mandatory Stock Savings and Rising Retirement Age Spark Sharp Divide
22.06.2026 - 07:04:01 | boerse-global.de
A sweeping pension reform package containing roughly 30 recommendations has landed on Chancellor Friedrich Merz’s desk, triggering immediate pushback from unions and left-leaning politicians while winning cautious support from employer groups. The commission’s proposals, handed to Merz and Bundestag President Bärbel Bas on June 21 and scheduled for official presentation on June 23, aim to shore up Germany’s pay-as-you-go system through a combination of forced stock-market investing and a later retirement age tied to life expectancy.
The centerpiece is a mandatory “equity pension” modeled on Sweden’s system. Contributions would start at 0.5 percent of gross wages and gradually rise to 2 percent, split evenly between employers and employees. A state-run fund would manage the assets to keep costs low. The goal: lift the pension level from its current 48 percent of average earnings to 50 percent by 2050. Monika Schnitzer, chair of the German Council of Economic Experts, welcomed the plan. But Frank Werneke, head of the ver.di union, warned that the capital pillar would arrive too late for pensioners in the 2030s.
Starting in 2032, the statutory retirement age would be linked to rising life expectancy under a formula that trades two extra contribution years for one additional year of pension. The commission projects the age will hit 67.5 in 2041, 68 in 2051, and possibly 70 during the 2090s. The popular “pension at 63” scheme would be scrapped, except for people with health restrictions. At the same time, the contribution rate to the public pension insurance is forecast to climb to 19.9 percent by 2028.
To expand the contributor base, the commission wants to bring in self-employed workers, members of parliament, and corporate board members. Civil servants would stay in their current system for now, but their pensions would be aligned with the general level. Mini-jobs—those small part-time positions—would largely disappear, surviving only for school pupils. On the occupational pension front, an opt-out model is planned: employees automatically join unless they explicitly decline. Currently about 20 million workers, or 50 percent of the workforce, have such a plan. In small firms with fewer than ten employees, the coverage rate languishes at 25 percent, while in large companies it reaches 86 percent. On June 11, the Left Party introduced a legislative initiative calling for stronger integration of occupational pensions into the statutory system, especially for small and medium-sized firms.
The Federal Labor Court has clarified that apprentices generally have a right to occupational pension benefits; the law treats them as employees unless the pension plan explicitly excludes them. For low earners and mini-jobbers, a statutory right to salary conversion has existed since 2025 for monthly earnings above €556. Since 2019, employers must kick in at least 15 percent when saving on social security contributions through conversion. Yet experts warn that many old contracts yield just 1.5 to 2 percent returns, and switching jobs complicates the portability of accumulated rights.
The political fault lines are deep. Employer representatives and the Seniors’ Union demand swift implementation. In contrast, IG Metall, Juso leader Philipp Türmer, and the Left Party reject both the retirement-age increase and the end of the “pension at 63.” The Association of Victims of Direct Insurance also criticizes the double taxation of occupational pensions during the payout phase, which it says eats up as much as a fifth of the net benefit.
