Confidence in Retirement Crumbles as Unions Demand Mandatory 2% Employer Pension Contribution

Only 53% of German workers believe they can work until retirement, as DGB and Verdi demand a mandatory 2% employer pension contribution to secure retirement income.

A growing number of German workers doubt they can stay in their jobs until the official retirement age, a fresh DGB survey reveals – even as the country’s largest unions push for a compulsory employer contribution to close the gap.

Only 53 percent of employees surveyed believe they will be able to perform their current role until retirement, down from a slightly higher figure last year. The proportion who say they definitely cannot manage that rose to 40 percent, compared with 39 percent in the previous survey. The numbers lend urgency to demands from DGB chair Yasmin Fahimi and Verdi leader Frank Werneke for a mandatory 2 percent of gross wages to be paid by employers into occupational pension schemes (bAV).

Speaking Monday, Fahimi called the reform proposals put forward by Germany’s pension commission “too non-binding.” Her main concern: the commission does not guarantee a net replacement rate of 70 percent for retirees. Without such a safeguard, she warned, pension security risks being hollowed out.

Werneke echoed the criticism, pointing to the commission’s plan to give more weight to capital-funded pension provision. He argued that if there is no legal obligation, employers could cite costs as a reason to shirk responsibility. He also lamented insufficient dialogue with trade unions within the commission itself.

The commission had earlier proposed linking the retirement age to life expectancy and expanding capital-funded schemes – moves the unions see as inadequate without a binding employer contribution.

Political support for the union demand is mixed. Vice-Chancellor Klingbeil backed the idea yesterday, but employer organisations oppose any such mandate. Within the SPD, fractures are visible: top candidates in eastern Germany, including Mecklenburg-Vorpommern’s Manuela Schwesig and Saxony-Anhalt’s Armin Willingmann, rejected parts of the current pension package in mid-July, specifically the planned abolition of the “Rente mit 63” (pension at 63).

Coverage of occupational pensions remains highly uneven. Nationally, about 18 million employees have a company pension. But only 25 percent of micro-enterprises offer one, according to reports released yesterday. The construction workers’ union IG BAU highlighted that physical strain makes prolonged work unrealistic for many. In the Uckermark region, just 60 out of more than 1,500 construction workers are older than 63. The union demands easier access to retirement and firmly opposes raising the standard retirement age to 67.