Overview
- A federal pension commission this week presented a 33-point reform that centers on a new state-run capital-funded pension paid into by employers and workers and invested at low cost on capital markets.
- Chancellor Friedrich Merz and Labor Minister Bärbel Bas have said they will implement the commission’s recommendations in full, but internal party critics, trade unions and social and tenant groups have publicly opposed key elements.
- The commission says the capital-funded element will not meaningfully raise benefits until about 2040, so it proposes a tax‑funded transition supplement and a temporary ‘transition factor’ to hold up benefit levels into the mid-2040s while the new funds mature.
- Separately, Housing Minister Verena Hubertz has circulated a draft Wohngeld overhaul that would halve the heating-cost allowance, stop automatic indexation and change the formula to save roughly €738 million in 2027 and about €1 billion a year thereafter, a move tenant and homelessness groups say will hit pensioners and single parents hardest.
- Key coalition and budget committee talks are due in early July, where lawmakers will debate the transition rules, contribution rises, expanded compulsory coverage for many groups (including many mini-job workers) and the political fallout from proposed housing-aid cuts.