German Pension Contributions Set to Jump to 19.9% by 2028, New Forecast Shows Sharper Rise Ahead
The German Pension Insurance has revised its forecast, now projecting the contribution rate will rise to 19.9% in 2028, a sharper increase than previously expected, piling pressure on the government's reform commission.
A Sharper Rise Than Expected
The contribution rate for Germany's statutory pension insurance is now projected to climb to 19.9% of gross income in 2028, according to the latest spring financial estimate from the Deutsche Rentenversicherung (DRV). This is 0.1 percentage points higher than the 19.8% forecast in autumn 2025 and marks a significant jump from the current rate of 18.6%, which has been stable since 2018. The rate is expected to remain at 18.6% through 2027 before the sharp increase takes effect.
For the pension insurance, the projected increase in the contribution rate does not come unexpectedly.
The DRV noted that the current rate has been stable since 2018 and that the expected increase in 2028 would be the first hike since 2007.
The Long-Term Trajectory
The forecast paints a picture of steadily rising costs. After hitting 20% in 2029, the contribution rate is projected to climb to 20.9% by 2035 and reach 21.1% by 2040. This long-term outlook is slightly more optimistic than the autumn 2025 forecast, which had predicted a rate of 21.2% by 2040. The demographic pressure is stark: the number of equivalent contributors is expected to fall from 31.4 million today to 29.8 million in 2040, while the number of equivalent pensioners rises from 17 million to 18.7 million.
- 2026
- 18.6 %
- 2027
- 18.6 %
- 2028
- 19.9 %
- 2029
- 20 %
- 2031
- 20.2 %
- 2032
- 20.5 %
- 2033
- 20.7 %
- 2034
- 20.9 %
- 2035
- 20.9 %
- 2040
- 21.1 %
The Cost for Workers and Employers
The pension contribution is split equally between employers and employees. An increase from 18.6% to 19.9% means an additional 0.65 percentage points of gross salary for workers. For an employee earning €4,000 gross per month, this translates to a monthly payment of €398 instead of €372, an annual increase of €312. A worker earning €4,500 would pay an extra €351 per year, with total annual contributions exceeding €5,300. The burden scales with income up to the contribution ceiling of €8,450 per month.
Broader Social Security Pressures
The pension system is not the only one under strain. The German Council of Economic Experts, in its spring report presented last week, warned that without reforms, total social security contributions could rise from the current 42.3% to nearly 50% by 2040. Health and long-term care insurance are also facing financial difficulties. Additionally, the Federal Employment Agency is reportedly facing a higher-than-expected deficit, potentially reaching over €5 billion by the end of the year due to a weak economy and rising unemployment.
The Political Response
The updated forecast intensifies the pressure on the government's pension commission, which was appointed by the coalition government of the CDU/CSU and SPD. The commission is expected to present its reform proposals by the end of June. The government plans to follow this immediately with a major reform package that will also address taxes, the labor market, and bureaucracy reduction. The cost of existing guarantees, such as the legal requirement to maintain a pension level of 48% until 2031, is projected to cost €3.8 billion in 2029, rising to €16 billion annually by 2040.
