Six Million German High Earners to Shoulder Bigger Care Costs as 2027 Reform Tightens Social Security

German government's PNOG reform targets €22.5B gap by raising care contributions for top earners, increasing childless surcharge, and cutting subsidies. Critics call it unfair.

Higher earners in Germany are bracing for a substantial increase in long-term care insurance contributions from 2027, part of a wider social security overhaul that the government says is needed to close a €22.5 billion financing gap projected for 2026 and 2027. A draft bill from the Federal Ministry of Health, dated June 4, proposes raising the contribution assessment ceiling in long-term care insurance to match the annual earnings threshold for compulsory insurance — set at €77,400 for 2026 — which would directly affect roughly six million workers.

The reform, known as the Pflegeneuordnungsgesetz (PNOG), targets the system's persistent shortfall by extracting more from those at the top of the income ladder. At the same time, the surcharge for childless employees will increase by 0.1 percentage points to 0.7 percentage points from January 1, 2027. The ministry expects that measure alone to generate around €1.6 billion in extra revenue the first year. Additional savings come from slowing the phase-in of relief payments for nursing home residents: the maximum subsidy of 75 percent will now require 4.5 years of residence before taking full effect.

Critics quickly denounced the plan. Yasmin Fahimi, chair of the German Trade Union Federation (DGB), called it a "savings package" that unfairly burdens contributors. She pointed in particular to a proposed cut in pension contributions for relatives caring for family members, which would reduce the subsidised rate to 70 percent — a move estimated to save €1.9 billion. The DGB also objects to the complete elimination of the relief benefit for people with care level 1 (the lowest category).

Earlier Adjustments, Broader Impact

Before the 2027 care?specific changes take effect, the government has already locked in higher contribution assessment limits across all branches of social insurance starting in 2025. For statutory health and long-term care insurance, the ceiling will rise to €66,150 per year — an increase of €4,150. The compulsory insurance threshold will climb to €73,800. In pension and unemployment insurance, a uniform national ceiling of €96,600 will apply.

While the general health insurance contribution rate remains stable at 14.6 percent, industry observers such as the BKK umbrella organisation expect the average supplementary contribution to jump by 0.75 percentage points, pushing it above 2 percent.

Pension System Under Demographic Pressure

The burden does not stop at care insurance. Estimates published by the German Pension Insurance (DRV) in June 2026 paint a stark picture for the retirement system. The pension contribution rate is projected to hit 19.9 percent in 2028 and 20.0 percent in 2029, driven by an ageing population and sluggish economic growth. The sustainability reserve — a buffer fund that stood at €41.3 billion at the end of 2025 — is forecast to dwindle to €11.9 billion by the end of 2027.

To stabilise finances, the government is relying on the so-called "Generationenkapital," a sovereign wealth fund with a target volume of €200 billion. Starting in 2026, annual contributions of €12 billion will flow into the fund.

Tighter Rules and Broader Contribution Bases

From 2028, care benefits will be adjusted annually in line with inflation, a move intended to keep payouts from losing real value. At the same time, the government plans to include more mini?job holders (who currently earn up to €556 per month) under the contribution obligation, which should bring in an extra €1.2 billion each year.

The cumulative effect of these measures is a multi?year squeeze on high?income earners, who will face rising contribution ceilings, higher care surcharges, and upward?trending pension rates — all while the system struggles to cope with demographic realities. The draft PNOG is in its early stages and could still be modified before final passage, but the direction is clear: Germany's social security net is tightening, and the costs will land squarely on those who earn the most.