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2026 Benefit Freeze, Tighter Asset Rules and a Pension Age Clash Reshape Germany’s Social Policy

A benefits freeze plus tighter asset tests in 2026 raises pressure on low incomes, making the 2025 housing allowance increase more pivotal.

Overview

  • Bundesbank president Joachim Nagel calls for a higher retirement age and broad pension reforms, while Verdi rejects the idea and urges a stronger statutory pension rather than longer working lives.
  • The cabinet’s 2026 ‘zero increase’ for standard rates in Bürgergeld and in old‑age and disability assistance awaits Bundesrat approval and would erode purchasing power if inflation persists.
  • From 2026, the new Grundsicherung ends the asset grace period and introduces age‑based protected savings of roughly €5,000 to €15,000, replacing far higher initial allowances.
  • A Nordhausen pilot requires under‑25s on benefits without training to work up to 40 hours a week for €1.20 per hour, yet only eight of 60 invitees began and initial 10% sanctions are being examined for no‑shows.
  • Housing benefit rose about 15% in January 2025 for roughly two million households, but many eligible pensioners have not applied; entitlement hinges on counted income, cold rent and local rent tier, and consumer groups warn about fee‑charging pseudo‑application sites.