Germany will gradually raise its retirement age to about 70 by the early 2090s under recommendations backed by Chancellor Friedrich Merz, as a means of future-proofing the pension system for an ageing population. The proposals, presented by an expert commission on Tuesday, aim to link retirement age to rising life expectancy and eliminate early retirement options.
Merz assures citizens amid pension overhaul
“No citizen needs to worry,” said Merz, emphasizing that the measures would prevent the collapse of the creaking pension system and strengthen the social contract between generations. He argued that young people would be given a “reason for optimism” by the reforms, which would “lift a tremendous burden” from their shoulders. The commission, which held long daily sessions from January, produced a 33-point plan outlining key changes.
Key recommendations: stock market investments and expanded contributions
Among the commission's key recommendations is the obligatory investment of contributions made by workers and employers in the stock market to increase and safeguard the fund's value for future generations. It also proposed expanding compulsory pension contributions to include civil servants and self-employed workers. The current pensionable age for anyone retiring in the early 2030s is 67, a figure set about two decades ago. The panel said this should be gradually increased in line with life expectancy, rising to about 70 by the early 2090s.
Demographic pressures driving reform
Germany has one of the fastest-ageing populations in the world. According to latest statistics from 2024, about 23% of Germans – or 19 million – are 65 years or older, compared with just 15% in 1991. The average life expectancy for men is 78.5 years and 83.2 years for women. Like many western countries, Germany faces the challenge of ensuring the pension system's future when fewer workers finance the pensions of more, longer-living retirees.
Government aims for swift passage despite criticism
The government hopes to pass the reforms before the summer recess next month, though they must still be debated and voted on in parliament. “All elements of this reform package must now be implemented swiftly,” said Merz, insisting: “Failure is not an option.” The leader of the conservative Christian Democrats said his coalition was united, despite some leftwing members from the junior coalition partner, the Social Democrats, and trade unions questioning the fairness of certain recommendations.
Critics target scrapping of early retirement for long-term workers
Critics targeted the proposal to scrap the right of those who have worked for 45 years to retire at 63 without pension reduction, saying it would penalize those in physically demanding and lower-paid jobs, such as builders or carers. The experts pointed out this provision had often benefited men in well-paid positions with unbroken employment records. “We cannot afford to isolate or reject individual measures,” Merz said, adding that the reform commission had created a “comprehensive concept … that works as a whole.”
Historical context and market skepticism
Germany’s pension system, introduced by Chancellor Otto von Bismarck in 1889, is the oldest state-backed system of its kind. The original retirement age was 70, an age far fewer workers reached then. Over 200 years later, it could be 70 again for anyone born from 2021 onwards. Critics expressed concern over dependence on the capital market, especially during economic downturn. Germans are generally averse to investments, preferring savings accounts. Merz, a former investment banker, stressed the importance of a long-term perspective: “The use of the capital market in the statutory pension scheme is perhaps the key factor in determining the long-term viability and stability of our pension system.”
