Germany’s Pension Overhaul Targets 6.8 Million Minijobbers as Employer Group Warns of €40 Billion Cost
Published on 07/28/2026 at 10:23 | Redaktion boerse-global.de
Germany’s coalition government is pressing ahead with the most sweeping pension reforms in decades, a package that would strip roughly 6.8 million low-wage “Minijob” workers of their special tax-and-contribution status while simultaneously introducing a new state-subsidised investment account to replace the troubled Riester-Rente scheme.
The plans, which Chancellor Friedrich Merz said would implement the recommendations of a government-appointed pension commission in full, have drawn sharp opposition from the Federation of German Employers’ Associations (BDA). The group’s president, Rainer Dulger, warned that the combined effect of the changes would add more than €40 billion in annual costs for businesses and employees.
“The security of pensions cannot be guaranteed by making labour more expensive,” Dulger said, calling for major corrections to the legislative drafts.
Under the commission’s blueprint, the gradual introduction of a capital-funded supplementary pension — modelled on the Swedish system — would begin in 2028, with contributions rising to 2 percent of wages. Employers and workers would split that increase equally. The BDA calculates that total pension-related contributions could climb to 22 percent of payroll within five years, a level it says would seriously damage Germany’s price competitiveness.
The reform also targets the country’s Minijob sector, where workers currently earn up to €538 per month without paying full social security contributions. The commission recommended that these positions be automatically integrated into the statutory pension system, with no opt-out option. Only school students would be exempt. Currently, just 20.9 percent of Minijobbers voluntarily pay into the state pension.
Beyond the Minijob changes, the commission proposed a phased increase of the statutory retirement age beyond 67, the elimination of the penalty-free early pension after 45 contribution years, and the reintroduction of the so-called sustainability factor from 2031. A new “protective pension” would replace the 45-year rule, requiring at least 35 years of contributions and a health check, with early exit possible no more than two years before the standard retirement age.
Self-employed workers and politicians would also be brought into the mandatory state pension system for the first time.
Separately, the Bundesrat — Germany’s upper house of parliament — has approved the Altersvorsorgereformgesetz, which from 1 January 2027 will replace the Riester-Rente with a new Altersvorsorgedepot (AVD). The state will provide a maximum basic subsidy of €540 per year for those who contribute €1,800 of their own money, plus a €300 child allowance if a minimum monthly contribution of €25 is paid.
The German Trade Union Federation (DGB), led by Yasmin Fahimi, has put forward a counter-proposal. It demands the pension level be raised to 50 percent of average earnings initially, then to 53 percent, financed by a “demographic supplement” drawn from taxes on high incomes and wealth. The DGB flatly rejects any increase in the retirement age.
Meanwhile, financial economist Frank Hechtner has calculated that net incomes will fall from 2028 onward despite planned income-tax reforms, because rising social security contributions will outweigh the tax relief. A childless single person earning €6,000 gross per month would lose €242 annually; at €9,000 gross, the loss would reach €904.
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