CSU says early pension penalties to rise from 0.3% to 0.4% per month

Penalty rise for early retirement

Anyone who retires ahead of schedule currently loses 0.3 percent of their statutory pension for each early month. CSU parliamentary group leader Alexander Hoffmann told the Redaktionsnetzwerk Deutschland (RND) that the rate should rise to 0.4 percent per month and called the step overdue. According to the German Pension Insurance (Deutsche Rentenversicherung), the deduction was introduced in the mid-1990s and has not changed since. Hoffmann said a higher rate of 0.5 percent had been debated for a long time before 0.4 percent was settled on.

Hoffmann put it this way:

“It was long under discussion to raise them to 0.5 percent. Now they will, legally secured, come in at 0.4 percent.”

Budget cuts behind the plan

The federal government plans to cut its grants to the pension insurance by 3 billion euros in 2027, instead of the 1 billion euros originally planned. Hoffmann said the higher penalties would offset part of that reduction. He also argued that they would keep contribution increases in line with the forecast.

Originally planned1

Now planned3

Originally planned

1 billion euros

Now planned

3 billion euros

Data from the article text

The statutory contribution rate currently stands at 18.6 percent and is expected to rise to 19.7 percent in 2028. Hoffmann pledged that the government would hold contributions to the planned path.

“We will not raise pension contributions beyond the planned level.”

Currently18.6%

2028 (expected)19.7%

Currently

18.6 %

2028 (expected)

19.7 %

Data from the article text

Timing and next steps

Hoffmann gave no fixed start date. Asked when the change should apply, he said it should ideally take effect within the 2027 budget year. The Federal Labour Ministry is to present a concrete proposal on the timetable. SPD parliamentary group leader Matthias Miersch expects a cabinet decision on the overall pension reform still in 2026. The reform is one of the central items on the agenda of the black-red coalition under Chancellor Friedrich Merz, but a full package has not yet been agreed because of disputes within the coalition.

Dispute over the 45-year rule

Hoffmann also pressed the SPD for further changes to the pension without deductions after 45 years of contributions. He called it a "design flaw in the pension system" that costs billions and does not reach the people who truly need an early exit. Pressed on the SPD's position, he said:

“Cosmetic changes are not enough. We need real structural reforms.”

If the SPD wants to keep the rule, Hoffmann said, it must propose savings of the same size elsewhere. The SPD has so far rejected a full abolition. One compromise under discussion would stop counting periods of unemployment benefit receipt toward the 45 years. The dispute weighs on the planned pension reform.