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Pension Reform Possibilities for Germany

Author

Listed:
  • Balázs Pálvölgyi
  • Dirk Neumann
  • Martijn Hoogeland
  • János Varga

Abstract

Demographic ageing and slow growth are putting pressure on the sustainability of the German pension system as well as on the adequacy of pensions. This discussion paper takes stock of the functioning and challenges of the German pension system and provides an overview of the main reform options currently discussed in the public debate. In practice, a combination of reforms will be best suited to deliver on the objectives of fiscal sustainability, adequacy and social fairness. This combination could consist of (i) labour market reforms to increase hours worked and enable longer careers with fewer interruptions, thus contributing to increasing social security contributions, (ii) adjusting pension indexation by accounting for demographic ageing in particular, (iii) increasing the effective retirement age by reducing early retirement pathways and raising the statutory retirement age, and (iv) an enhanced role for supplementary pensions.

Suggested Citation

  • Balázs Pálvölgyi & Dirk Neumann & Martijn Hoogeland & János Varga, 2026. "Pension Reform Possibilities for Germany," European Economy - Discussion Papers 250, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:dispap:250
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    File URL: https://economy-finance.ec.europa.eu/publications/pension-reform-possibilities-germany_en
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    More about this item

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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