Pension Reform Possibilities for Germany

Balázs Pálvölgyi, Dirk Neumann, Martijn Hoogeland and János Varga

No 250, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

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.

JEL-codes: H55 J26 J32 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2026-06
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Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:250

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