Expanded eligibility for work-related retirement benefits offered to employees
The German government is taking significant steps to bolster occupational pensions, viewed as an essential pillar alongside the statutory pension. Despite an increase in the number of socially insured employees with active occupational pension entitlement, the distribution rate of these pensions decreased to 52% at the end of 2023.
In an effort to make retirement provision more attractive for people with low and middle incomes, the German Federal Ministry of Labour and Social Affairs (BMAS) has proposed legislation to strengthen occupational pensions. This includes facilitating opt-out systems, allowing automatic use of a portion of income for pensions unless otherwise objected, and making it easier for smaller companies to offer occupational pensions.
The existing social partner model is to be further developed to facilitate agreement on occupational old-age provision. Regulations for pension funds are also set to be "flexibilized" to potentially increase yields and risks.
The "Second Occupational Pension Strengthening Act" has been adopted by the cabinet and is set to be discussed in the Bundestag and Bundesrat. The law, scheduled to be implemented from 1 January 2026, aims to make occupational pensions more attractive, particularly for those with lower incomes.
The tax promotion of occupational pensions is expected to be increased, and the pension contribution is projected to rise from the current 18.6% to 18.8% from 2027. The government identifies gaps in the dissemination of occupational pensions, especially among smaller companies, and plans to address these issues.
Social elections will be more strongly provided online, with the federal election commissioner for social insurance elections, Peter Weiß, announcing the expansion of online voting in future elections. Over 330,000 members of five statutory health insurers cast their votes online as part of a pilot project in the recent social elections in 2023.
However, the head of the German Social Association (SoVD), Michaela Engelmeier, has criticized the three-pillar model (statutory, occupational, and private provision), stating that it has failed and calling for the statutory pension to secure the standard of living again.
Financing improvements to the statutory pension, including a stable pension level until 2031 and better pensions for millions of mothers, is expected to be financed with tax money. Social Minister Barbel Bas and Finance Minister Lars Klingbeil consider good occupational pensions as a significant factor in ensuring a good quality of life in old age.
