The 13-member Alterssicherungskommission, chaired by Frank-Jürgen Weise (former head of Germany's Federal Employment Agency) and law professor Constanze Janda, spent six months drafting the package before delivering it at the Chancellery on June 23. The warning behind the urgency is stark: the report notes that by 2040, for every person aged 67 or older, there will likely be only about two people of working age to support them.
The centrepiece is a new "Kapitalrente" — a funded pension pillar modelled loosely on Sweden's system. Contributions would start at 1 percent of gross wages, split evenly between employer and employee, before later rising to 2 percent. The commission projects that after 45 years of contributions, this capital pillar alone could add more than €770 a month to a pensioner's income. Without any reform, officials warn, the overall pension level would drift down to 46 percent of pre-retirement income; with the package, the goal is to lift it toward 50 percent, with people drawing public, workplace, and private pensions together targeting roughly 70 percent of their final net wage.
Other elements include gradually raising the standard retirement age in line with life expectancy — with some projections floating a retirement age near 70 by the latter part of the century — phasing out the "Rente mit 63" early-retirement option for those with 45 years of contributions, and broadening who pays into the system to include groups such as the self-employed and, for the first time, members of parliament.
"All elements of this reform package must now be implemented quickly," Chancellor Merz said after receiving the report. "It is high time. Doing nothing is not an option." Labour Minister Bas was equally blunt about the all-or-nothing nature of the deal: "There's no cherry-picking now — it's a complete work of art."
Merz has framed the capital pillar as his own initiative, predicting it could channel at least €30 billion a year of additional investment into the economy and spark new growth and employment. The coalition aims to agree draft legislation over the parliamentary summer break and begin formal deliberations in the Bundestag this autumn, with Merz pushing for final passage by the end of the year. Criticism has already surfaced from unions, employer associations, and opposition politicians — including concerns raised in the Bundestag over proposed cuts to pension credits for women who care for relatives, and warnings from regional leaders that the plan may not be as fair across generations as the coalition claims.