Merz pledges German pension reform bill by year-end after labour minister resigns

Pension reform timetable

Friedrich Merz told the employers' congress (Arbeitgebertag) of the Confederation of German Employers' Associations (BDA) in Berlin on Tuesday, 13 October 2026, that the cabinet should adopt the pension reform this year so it can be introduced immediately in the first reading in the Bundestag. Passage is to follow in the first quarter of 2027, because the reform must also pass the Bundesrat and is a comparatively extensive body of legislation. Merz said he was confident the reform would be in force next year. He said the government had received the proposals of the pension commission on 22 June and that no draft bill existed by 13 October, which he called too long.

New labour minister and pending bills

Merz said Alexander Schweitzer (SPD), appointed as labour minister on Tuesday afternoon, would attend his first cabinet meeting on Wednesday. Merz expected Schweitzer to bring the agreed draft laws to cabinet "as quickly as possible" and wanted a draft coordinated in advance with the Bundestag factions and the states. Merz said that if Schweitzer achieved this this year, he would have done his job. The labour ministry holds the pension reform and a labour market reform agreed between the Union and the SPD. Merz said the new labour market laws were also overdue and could be done relatively quickly.

What the pension reform contains

According to wnp.pl, the reform is based on 33 recommendations of the government commission presented in June. It would add a mandatory capital-funded pillar to the statutory system, financed by an additional contribution of 2% of wages, link the retirement age to average life expectancy after 2031, and abolish early retirement for people with 45 years of contributions. Merz said Germany was at least 30 years late with pension system reforms and that contributions would have to rise temporarily to account for demographic change. He argued that it is not fair for healthy, fit people to retire early, and said the system cannot afford fewer workers financing more and more pensioners.

Employers push for speed

Employers' president Rainer Dulger asked the government for rapid reforms and said growth requires "less bureaucracy, more flexible work, lower burdens and a state that becomes faster and more digital". At the congress he handed Merz a 20-point plan from the BDA, which says Germany has partly lost its price competitiveness and is not using its economic potential "by a long way". The plan names bureaucracy reduction, flexible working hours and "structural reforms in pensions, health and care" as priorities.

Merz on the young and the economy

Merz said young people worry about the future of the social systems and see that they must pay ever higher contributions. "If we continue with the current situation the level of pensions will fall and contributions will rise. No young person can accept that," he said. He added that "small corrections as in the past are no longer enough". On the economy, he said the German economy had grown this year and prospects for next year were good, but that Germany needed to address structural problems. Merz also said he had no intention of becoming the nation's favourite, and wanted to set the country on the right course.

Labour market and job losses

Money.pl, citing a survey of more than 6,000 employees, reported that almost 5 million people lost their jobs in Germany over five years, with most dismissals falling in 2024 and 2025. Merz said labour market protection against dismissal should be eased and that companies need more room. He announced new possibilities for fixed-term contracts. Reform proposals are unpopular, and Merz's coalition partners are losing support in polls, according to the reporting.