The skilled trades sector praises the pension reform proposals.

The pension commission has presented its reform proposals. The German pension system is to be restructured with 33 measures. The German Confederation of Skilled Crafts (ZDH) welcomes this and hopes that the federal government will implement them as a comprehensive package.

The German government appointed a commission to develop proposals for reforming the German pension system. The commission has now presented its recommendations. It proposes 33 measures to restructure the pension system and recommends implementing all of them in their entirety.

After 2031, the retirement age will be adjusted to reflect an increase in life expectancy. From 2041 onward, it will be raised by six months every ten years. This would result in a retirement age of 67,5 years in 2041 and 70 years in 2091. The option of retiring at 63 without deductions after 45 years of contributions will be abolished. Exceptions will be possible for hardship cases, such as employees with particularly demanding work histories or health problems.

Minijobs are to be abolished

Pension contributions are to increase by two percent. This increase will be shared equally between employers and employees. The additional revenue will be invested in a state-managed fund on the capital market to generate returns in the medium term. Until then, government subsidies will stabilize the pension level.

Self-employed individuals, civil servants, and politicians will also be required to contribute to the pension fund in the future. Contribution-free mini-jobs will be abolished; they will only be available to students. A sustainability factor will link pension increases to the ratio of contributors to pensioners.

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Remodeling to be more age-friendly

"The pension commission's list of recommendations has the potential to make the German pension system more generationally equitable through a necessary structural overhaul," commented Jörg Dittrich. The president of the German Confederation of Skilled Crafts (ZDH) particularly praised the linking of the retirement age to life expectancy, the reduction of early retirement incentives, the introduction of a sustainability factor, and the move towards a fully funded pension system.

"These elements strengthen long-term stability and improve the generational balance. A mandatory pension scheme for the self-employed is also the right approach. However, policymakers need to make adjustments both in the design of the mandatory pension scheme and in the financing of the funded pension system: The planned mandatory pension scheme requires a general freedom of choice for the self-employed between statutory and private pension provision."

Keep social security contributions below 40 percent

The introduction of additional contributions to finance the funded pension system must not lead to a higher overall burden. The goal must remain to stabilize the total social security contribution rate below 40 percent. When restricting early retirement options, it is important to allow people in physically demanding professions to retire without deductions after 45 years of contributions, starting at age 65. 

Dittrich points out that the generally positive assessment should not obscure the fact that businesses and employees will initially face another massive burden. "The coalition must finally find bold answers here as well. Only with simultaneous relief in other areas will the economy recover. Competitiveness must not be allowed to deteriorate further."

All measures should be implemented.

The "far too high" tax and contribution burden is placing an enormous strain on the economy. The proposal to abolish the tax and social security status of mini-jobs altogether is particularly problematic. "Mini-jobs are an indispensable tool for flexibility. They allow companies to react to fluctuating order volumes, staff shortages, and customer demands. Other solutions are definitely needed here."

Dittrich hopes that the federal government will implement all measures in their entirety. Chancellor Friedrich Merz (CDU) has announced his intention to do precisely that. The measures can only work as a whole. Therefore, it would be counterproductive to ignore individual recommendations from the commission.

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