Germany is debating a profound reform of the pension system in the face of population aging and financing difficulties. A committee presented Chancellor Friedrich Merz with 33 recommendations, in a report delivered on June 23, which include linking the retirement age to life expectancy evolution after 2031. The proposed mechanism distributes each increase in life expectancy in a two-to-one ratio between work and retirement, which could raise the access age from the current 67 years to 67 years and six months between 2031 and 2041, potentially reaching 70 years in the early 2090s, depending on approved legislation and demographic evolution.
The projections of the German Federal Statistical Office, Destatis, indicate that one in four people residing in Germany will be 67 years or older in 2035, when currently this proportion is one in five. Simultaneously, a decrease in the working-age population is expected, which aggravates the pressure on the pension system with the exit of the largest generations to retirement and the entry of smaller generations into the labor market.
Among the most controversial recommendations is the elimination of early retirement without penalty for those with 45 years of contributions, currently known as "Rente mit 63". The committee also proposes raising from 63 to 64 years the minimum age for early retirement with cuts, accessible after 35 years of contributions. The president of the IG Metall union, Christiane Benner, contested the elimination of this modality, arguing that the system should recognize the effort of those who contributed for a longer time.
The reform package also includes a mandatory savings component invested in financial markets, with additional contributions of 2% of income split equally between worker and employer. This measure would be implemented gradually, in annual increments of 0.5 percentage points, inspired by the Swedish model. In Portugal, the retirement age is already linked to average life expectancy, set at 66 years and nine months for 2026 and 66 years and 11 months for 2027.
