The German federal cabinet has approved the first pension policy measures of the black-red coalition government. During Wednesday’s session, the government decided to stabilize the pension level at 48 percent until 2031 and expand the Mütterrente (parental pension). The law, presented by Labor Minister Bärbel Bas (SPD), implements two measures from the coalition agreement and will now be debated in the Bundestag.
“The stabilization of the pension level at 48 percent of the average wage until 2031 was a central demand of the SPD in the election campaign,” the Labor Ministry said. “For all pensioners, this means that pensions will generally increase in line with wage developments.”
Without the newly approved extension, the guarantee would have expired at the end of this year, which would likely have led to slightly lower pensions. “By stabilizing the pension level at 48 percent, a pension of, for example, 1500 euros on July 1, 2031, will be about 35 euros per month higher,” the ministry added.
The expansion of the maternity pension concerns children born before 1992. From January 2027, the parental caregiving period of three full years will be fully recognized in pension calculations for mothers or fathers, with retroactive payments starting in January 2028. This expansion was pushed by the CSU within the coalition.
The additional costs of the pension package will be financed through tax revenues. The extension of the pension level guarantee will initially cost around 3.6 billion euros from 2029 and rise to about 11 billion euros annually by 2031. The maternity pension expansion is expected to cost approximately 5 billion euros per year.
Minister Bas declared, “The pension remains stable and fair. With the extension of the pension level guarantee, we ensure that pension growth continues to follow wage growth – securing a permanently higher pension level, even beyond 2031.” She added, “The expansion of the maternity pension ensures greater fairness. Those who have raised children and thus performed an important service for society will now receive full recognition – regardless of the child’s birth year.”
Further pension policy decisions are expected after the summer break. The agreed pension package also includes the so-called “active pension,” designed to make working at older ages more attractive. Additionally, children and youths aged six to eighteen will receive a state-funded capital-backed pension savings account called the “early starter pension.” From autumn, a pension commission will work until 2027 on proposals for a fundamental reform of the statutory pension system.
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