DGB pension proposal rejects raising retirement age and urges stronger statutory pensions
DGB pension proposal rejects raising the retirement age and calls for higher statutory pension levels, an employer-funded occupational pension and tax changes to protect future retirees.
The German Trade Union Confederation’s (DGB) pension proposal, released Friday by a commission appointed by the union, firmly rejects any increase in the statutory retirement age and instead calls for more generous state pensions and stronger occupational provisions. The commission wants the standard replacement rate from the public pension to rise to 53 percent and a net pension replacement of 70–90 percent of pre‑retirement earnings for cohorts approaching retirement. It proposes funding these increases primarily through higher taxes on capital income and wealth and modestly higher social contributions, while preserving existing early-retirement options for long-career workers.
Commission majority opposes raising the statutory retirement age
The DGB commission explicitly states that the retirement age must not be increased, opposing government plans to link the statutory pension age to rising life expectancy. Members argue that raising the retirement age would unfairly shift the burden onto workers in physically demanding jobs and those with interrupted careers. The panel insists on maintaining the current framework for early retirement without actuarial penalties for people with 45 contributory years, which it says is essential to protect those who have endured long working lives.
Proposal aims to boost statutory pensions for baby‑boomer cohorts
At the core of the DGB pension proposal is a demand to lift the statutory standard level to 53 percent and secure a substantially higher net replacement for retirees from the large birth cohorts now entering retirement. The commission frames this as a correction to decades of benefit erosion and a response to persistent risks of old-age poverty among workers with below-average wages. It also calls for the expansion of the current “Grundrentenzuschlag” (supplement to low pensions) and for removing means-testing limitations that deny the supplement to those with modest additional income from rents or interest.
Shift toward employer-funded occupational pensions instead of a private capital model
Rejecting the government’s concept of a Sweden-style capital-linked supplementary pension financed by an added contribution, the DGB commission proposes a mandatory occupational pension fully financed by employers. Under the plan, employers would contribute two percentage points of annual gross salary—or at least roughly €1,000 per year—into company pension schemes, with details to be set in collective bargaining agreements. Where collective bargaining does not apply, the commission expects statutory rules to impose the same minimum employer contribution, thereby expanding coverage and shifting the burden away from employees.
Financing measures: taxes on capital and modest contribution rises
To fund the enhanced statutory and occupational benefits the commission advocates, the DGB pension proposal calls for higher taxation of capital income and wealth alongside “slightly increased contributions” from current contributors. The paper does not include a full cost calculation or a detailed financing blueprint, but it stresses progressive taxation on investment income and property as key levers. The commission also proposes preserving tax-financed basic income support for low-income retirees while introducing an exemption so part of future pensions is not fully offset when calculating social assistance entitlements.
Maintaining early‑retirement pathways and crediting caregiving periods
Beyond benefit levels and financing, the commission emphasizes social policy measures to recognize non‑paid labor and career breaks. It demands that penalty-free early retirement for those with 45 contribution years remain intact and that options such as block partial retirement from age 55 continue to be available. The DGB group also urges that periods spent caring for relatives be credited fully toward pension entitlements, arguing this recognition is vital to both gender equity and preventing income losses among caregivers in old age.
Political context and next steps toward a final report
The commission’s recommendations arrive amid broader government efforts to reform Germany’s pension architecture, including a government-backed proposal to introduce a capital-linked supplementary pension and to tighten access to early retirement to rein in public pension spending. The DGB paper reacts directly to the federal government’s commission and signals early conflict in negotiations that Chancellor Friedrich Merz’s administration and the labour ministry plan to take up soon. The union confederation said a comprehensive final report will follow “during the summer,” leaving the details and any fiscal modelling to forthcoming work.
The DGB pension proposal sets a clear benchmark for unions and social partners ahead of the expected government debate, framing the political choice as one between higher public benefits and maintaining existing early-retirement rights versus shifting toward capital-funded supplements and raising the effective retirement age in response to longevity gains.
