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Bundesrat Greenlights 3.74% Pension Raise Starting July 1

The Bundesrat’s decision secures an inflation-linked pension rise at a public funding cost estimated at 7.8 billion euros.

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Overview

  • The Bundesrat unanimously approved a 3.74% statutory pension adjustment effective July 1, 2025.
  • The increase will cost 7.838 billion euros in 2025 and is projected to total 15.674 billion euros annually from 2026.
  • A recent study shows 44% of Baby Boomers have taken early retirement, exacerbating demographic pressures on the system.
  • Lawmakers are debating reforms to limit early-retirement pathways such as the 'Rente mit 63' provision to bolster pension sustainability.
  • The government is considering an 'Aktivrente' that would let pensioners earn up to 2,000 euros per month tax-free to encourage extended workforce participation.