Germany’s Pension Commission Proposes Binding Retirement Age Link to Life Expectancy, Mandatory Funded Scheme
21.06.2026 - 09:34:04 | boerse-global.de
Today’s 30-year-olds in Germany could face a retirement age of 68, according to the final recommendations of a 13-member pension commission whose 80-page report was adopted unanimously. The package, containing roughly 30 proposals, will serve as the basis for upcoming legislative changes.
A Flexible Ceiling Driven by Longevity
At the heart of the plan is a mechanism that would tie the statutory retirement age to gains in life expectancy. Starting in 2031 or 2032, the age would rise gradually under a 2:1 model: for every year that average life expectancy increases, eight months would be added to the working phase and four months to the pension period.
For a person who is 30 today, this could push the retirement age to 68. The milestone of 69 would not be reached before 2071 at the earliest; the 70-year threshold would appear only in the 2090s. The goal is to stabilise the ratio of contributors to pensioners despite demographic change.
Mandatory Funded Pillar Modelled on Sweden
To shore up the pension level, the commission recommends introducing a compulsory capital-funded supplementary pillar, inspired by the Swedish system. Employees and employers would contribute equally, with the money managed by a state fund — likely the existing KENFO (the federal fund for nuclear waste disposal and pension reserves).
The launch is planned for 2028. Contributions would start modestly at 0.5 percent of gross wages and eventually rise to 2 percent. Together with the pay-as-you-go statutory pension, this should secure a pension level of around 50 percent by 2050. The current floor of 48 percent would be extended.
Broadening the Contributor Base
The commission wants to widen the financing basis. In future, self-employed workers, members of parliament and company executives would also pay into the statutory pension system. Over the long term, civil servants’ pensions are to be gradually aligned with the general scheme.
For mini-jobs, contribution-free status would be restricted to school pupils. To combat old-age poverty, the panel proposes higher income exemptions for retirees receiving basic subsistence benefits — between 20 and 30 percent.
End of the ‘Pension at 63’
The commission recommends scrapping the penalty-free early retirement option known as “Rente mit 63”. Instead of a fixed age threshold, an individual’s health status would determine whether they can retire early. A premature exit with deductions would be possible no earlier than age 64.
At the same time, the sustainability factor — which automatically adjusts pension increases to the contributor-to-pensioner ratio — would be fully reactivated from the early 2030s. Forecasts suggest the contribution rate could rise to 19.9 percent by 2028.
The report will be handed over to Chancellor Friedrich Merz and Labour Minister Andrea Nahles in the coming days. The federal government aims to assemble a reform package by summer, with cabinet consultations scheduled for early July.
