Germany’s Care Reform Plan Would Slash Pension Contributions for Family Caregivers by 30%

Leaked German plan slashes pension contributions for family caregivers by 30%, hitting women hardest, as political gridlock stalls wider reforms.

A sweeping overhaul of Germany’s long-term care insurance is drawing fierce opposition after a leaked draft revealed plans to cut pension contributions for family caregivers by nearly a third. The proposed Pflegeneuordnungsgesetz (PNOG) from Health Minister Monika Warken aims to plug a financing gap of more than €20 billion in the statutory care fund.

Under the plan, the pension contributions paid on behalf of relatives who provide unpaid care would drop by 30 percent. The ministry calculates that alone would save roughly €1.8 billion in 2027, rising to €7.8 billion by 2030. Critics argue the measure hits mostly women — who make up the vast majority of family carers — and effectively reduces their future retirement income.

The draft contains a series of additional cost-cutting steps. The contribution assessment ceiling would be raised to €77,400, affecting around six million employees. Childless workers would see their contribution rate go up by 0.1 percentage points. Minijobbers would also start paying contributions into the care fund, generating an estimated €1.2 billion annually. At the same time, eligibility criteria for care grades would be tightened and so-called relief budgets slashed.

Warken’s proposals have drawn sharp rebukes from care associations and politicians across the spectrum. The labour ministry, led by a coalition partner, has suspended a planned hearing on the bill pending further review.

Political gridlock is not confined to care reform. A separate plan to grant tax-free bonuses of up to €1,000 for employees collapsed in the Bundesrat last week, after states led by the conservative opposition refused to back it. Their main objection: the measure would cost up to €2.8 billion in lost tax revenue, with states and municipalities forced to absorb nearly two-thirds of the shortfall. The federal government had earmarked a tobacco tax increase to offset the loss, but that revenue flows entirely to the centre. Berlin can now call the mediation committee to salvage the proposal.

Meanwhile, the Arbeitsmarktstärkungsgesetz, which would make overtime supplements tax-free, has stalled. The original draft foresaw exemptions for surcharges of up to 25 percent of base pay, but only for hours worked beyond the collectively bargained full-time threshold. Critics note that nearly 30 percent of all employees — and almost half of all women in part-time roles — would see no benefit at all.

Adding to the sense of overload, Bundesrat President Andreas Bovenschulte warned the government against trying to push too many reforms at once. He described the coalition under Chancellor Friedrich Merz as “very strong on announcements” and urged it to prioritise tax reform. Bovenschulte threatened to block legislation in the upper house unless the states’ revenue losses are compensated. Noting that states and municipalities receive more than half of income-tax receipts, he floated a temporary suspension of the debt brake or alternative credit financing as possible solutions. However, he rejected scrapping the Handwerker-Bonus or the Dienstwagenprivileg as compensation measures.

The coalition aims to reach a deal on the entire reform package by 30 June 2026. In the coming days, ministers will hold further talks with unions and business associations.