German pension commission proposes linking retirement age to life expectancy and a mandatory capital-funded pillar

The commission's mandate

In early 2026, the 13-member commission chaired by Constanze Janda and Frank-Jürgen Weise began working on a comprehensive pension reform. Over five months and 150 hours of meetings they produced an 80-page report with about 30 recommendations. The document will be officially presented to Chancellor Friedrich Merz and Labour Minister Bas on Tuesday.

Retirement age ties to life expectancy

The most contentious proposal links the statutory retirement age to rising life expectancy using a 2:1 ratio: for every additional year of life expectancy, Germans would work eight months longer and receive four additional months of pension. Based on current projections this would lift the normal retirement age from 67 to 67.5 years by 2041, reach 69 in 2071, and hit 70 only around 2091. The commission explicitly rejects the notion of an imminent "pension at 70," describing its model as a gradual adjustment.

A mandatory capital-funded second pillar

Alongside the existing pay-as-you-go system the commission recommends a compulsory capital-funded component modelled on Sweden's premium pension. Initially 0.5 percent of gross earnings each from employees and employers would flow into individually owned accounts, rising to a total of 2 percent after a four-year phase-in. A state fund would manage the assets, and annual inflows are projected at 30 to 35 billion euros. The commission expects this pillar to push the combined pension level to 50 percent of average earnings by 2050, up from the current guaranteed 48 percent.

Ending "pension at 63" and reactivating the sustainability factor

The package eliminates the option to retire at 63 without deductions after 45 contribution years, arguing the scheme is costly and deprives the labour market of skilled workers. It also restores the sustainability factor from 2032 onward, tying annual pension increases more closely to the ratio of contributors to pensioners. While this dampens contribution-rate rises for workers, it means pensioners will see smaller annual adjustments.

Broadening the contribution base

To shore up financing the commission wants to widen the pool of contributors. Self-employed people, federal and state parliamentarians, and chief executives of stock corporations should be required to pay into the statutory system. Civil servants would be integrated over a longer transition, but their pensions would be aligned more closely with longer earnings histories. Minijobs would be restricted to school pupils earning up to 603 euros per month; all other employment would require pension contributions.

The commission explicitly sees its proposals not as a loose buffet of ideas from which the government can pick and choose, but as a coherent reform package.

Political path ahead

The commission's recommendations carry broad consensus among members from the CDU/CSU and SPD, the coalition partners. Chancellor Merz is to receive the report on Tuesday, and the government aims to pass a reform bill before the summer recess. The package is designed to stabilise the pension system for decades, but the gradual pace means today's schoolchildren would be the first generation to work until 70.