Germany backs pension reform to raise retirement age

The German government has backed a comprehensive set of pension reform proposals that would gradually raise the retirement age beyond 67, phase out early retirement, and establish a state-run investment fund. Chancellor Friedrich Merz endorsed the recommendations from an expert commission on Tuesday, June 23, calling for swift legislative action to address the financial strain on the nation's pay-as-you-go pension system caused by an aging population.

The commission's central proposal links the standard retirement age to life expectancy, recommending moderate adjustments starting after 2031. Based on current projections, the age would rise from 67 to approximately 67.5 years between 2031 and 2041, continuing to increase in subsequent decades, potentially reaching 70 by the end of the century. The plan also calls for phasing out the popular "Rente mit 63" scheme, which allows for early retirement at 63 after 45 years of contributions. The minimum age for this long-term insured pension would initially rise to 64 and then track future increases in the standard retirement age.

To broaden the system's financial base, the commission recommends expanding compulsory contributions to...