Overview
- Chancellor Friedrich Merz has ordered a government bill for the pension package to reach the cabinet by the end of 2026 with Bundestag deliberations planned for the first quarter of 2027, putting rapid pressure on coalition negotiations.
- The federal advisory Alterssicherungskommission recommends ending the current rule that allows an uncapped, penalty-free pension after 45 contribution years and replacing it with a targeted 'protection pension' for those who cannot work for health reasons.
- A central proposal is a new statutory capital-backed pension component administered centrally, financed by an additional contribution of roughly two percentage points shared by employers and workers, with gains showing mainly for cohorts retiring after 2040.
- Economic institutes warn the transition will raise contribution burdens in the short term because current pensions keep being paid while a capital reserve is built, with projections putting the overall contribution rate near about 22 percent by 2032.
- Public and political resistance is strong: polls show about 74 percent oppose abolishing the 45‑year rule, many current and near retirees would be affected (DRV recorded 262,361 such new pensions in 2025), and unresolved details on cut‑offs, hardship protections and cohort safeguards remain the core fight.