Germany’s Pension Overhaul Targets Mini-Jobs and Early Retirement in Sweeping Reform Blueprint
21.06.2026 - 10:53:19 | boerse-global.de
A government-appointed commission is recommending a fundamental rewrite of Germany’s retirement system, including the abolition of the popular “pension at 63” scheme and new social charges on mini-jobs that would limit their tax-free status almost exclusively to students. The package, due to be handed to Chancellor Friedrich Merz and Labour Minister Andrea Bas on 23 June, aims to tackle demographic pressures while stabilising pension levels.
Under the proposals, the contribution-free status for mini-jobs — currently capped at a monthly earning threshold of €603, based on the €13.90 minimum wage — would be stripped from most workers. The commission wants only school pupils to remain exempt from social insurance contributions in these roles. From 2027, employers would face social contribution rates above 38 percent for mini-jobbers. Experts anticipate the minimum wage climbing to €14.60, which would push the earnings ceiling to approximately €633.
Another significant change: mini-job income would be offset against widows’ pensions at a rate of 40 percent, reducing the financial support available to surviving spouses.
The commission also recommends phasing out the “pension at 63” rule that allowed workers with 45 contribution years to retire without penalties. That access would be eliminated entirely. Simultaneously, the statutory retirement age would rise in steps: from 2042 onward it would increase by half a year per decade. That means a retirement age of 67.5 in 2041 and 68 by 2051.
To keep the pension level stable — projected at 48 percent of average earnings in the long term, rising to 50 percent from 2040 when private provision is included — the commission proposes establishing a state-run capital fund. A parity-financed contribution of between 0.5 and 2 percent of gross wages would flow into a sovereign wealth fund invested in equities. For 2028, experts forecast the overall pension contribution rate will reach 19.9 percent. Starting in 2032, the so-called sustainability factor would be fully reactivated, linking benefit adjustments to changes in the ratio of contributors to pensioners.
Not everything is long-term planning. From 1 July 2026, pensions across Germany will rise by 4.24 percent. The income allowance for widows’ pensions will increase to €1,122.53 net per month. A newly introduced pension supplement will in future be counted in full against widows’ pensions.
Mini-jobbers retain the option to opt back into full pension insurance. Their own share would be 3.6 percent — roughly €21.71 per month if they earn up to the maximum threshold.
Industry voices, including the German Chamber of Commerce and Industry (DIHK), have warned that repeatedly raising the minimum wage risks creating perverse labour-market incentives. Meanwhile, research from the Bertelsmann Foundation and the Federal Institute for Vocational Education and Training (BIBB) shows that nearly 20 percent of 20- to 34-year-olds lack any vocational qualification and move directly into unskilled work.
