Germany spends less than the European average on pensions and keeps its older workers in employment much longer than its neighbours, but its retirees' relative standard of living is among the lowest in Europe; after the 2025 Rentenpaket, a commission proposes linking the retirement age to life expectancy.

Spending below the European average. Under Eurostat's harmonised definition (ESSPROS: old age, survivors, disability and early retirement, public and private schemes), Germany devotes 11.7% of GDP to pensions in 2024 (provisional), against 12.6% for the EU, 15.0% for France and 15.9% for Italy. The OECD SOCX database, with a different scope (old-age and survivors' cash pensions), gives 10.8% of GDP for public schemes and 0.7% for private schemes in 2021; the two measures are not comparable as a single series.

Three pillars, a dominant public base. The statutory pension insurance (gesetzliche Rentenversicherung), pay-as-you-go with a contribution rate of 18.6% of wages shared between employers and employees, provides most pensions. It is supplemented by occupational pensions (Betriebsrente) and subsidised private savings (Riester), which remain minor. Pensions are calculated in points (Entgeltpunkte) and uprated every 1 July in line with wages: +4.24% on 1 July 2026, in the West and the East alike.

Older workers who stay in work. The OECD's effective age of labour market exit reaches 64.2 for men and 63.9 for women in 2024, among the highest in the EU, for a normal retirement age of 66.2 (career started at 22). The statutory age (Regelaltersgrenze) is rising gradually to 67 for those born from 1964, reached in 2031. The employment rate of 55-64-year-olds is 75.3% in 2025 and that of 60-64-year-olds 67.6% (Eurostat), against 66.4% and 55.0% in the EU.

A low relative standard of living. The median income of people aged 65 and over is only 83% of that of the under-65s in 2025 (Eurostat), against 91% in the EU and 97% in France. The "pension level" (Rentenniveau: a standard pension after 45 years of contributions relative to the average wage, net of social contributions) is guaranteed at 48%. Old-age poverty and small pensions — despite the top-up basic pension (Grundrente) introduced in 2021 — remain at the heart of the debate.

The baby boomers retire. The old-age dependency ratio (people aged 65 and over per 100 people aged 15-64) reaches 35.9 on 1 January 2025 (Eurostat), against 34.5 in the EU. The large cohorts born in the 1960s retire by the mid-2030s, which weighs on both contribution revenue and spending.

The 2025 Rentenpaket. Passed by the Bundestag in December 2025, despite reservations from young CDU/CSU MPs about its cost, the package extends the 48% pension-level guarantee until 2031 (financed by the federal budget), expands the "mothers' pension" (Mütterrente) from 2027 and creates the Aktivrente: since 1 January 2026, an employee who keeps working beyond the statutory age can earn up to €2,000 a month tax-free (estimated cost about €890 million a year).

The pensions commission. Delivered on 23 June 2026, its report makes some thirty recommendations (33 according to most accounts). The most debated: linking the statutory age to life expectancy after 2031 (according to the press, a gradual rise towards 67.5 in the early 2040s), abolishing early retirement without deductions at 63 for people with very long careers, bringing the self-employed and MPs into the statutory scheme, and adding a mandatory funded component. The coalition committee pledged on 2 July 2026 to present a bill before the end of the year; none of these measures is in force yet.

Contributions heading up. According to the draft 2026 Rentenversicherungsbericht (forecasts), pensions would rise by about 4.1% on 1 July 2027, and the contribution rate would stay at 18.6% in 2027 before rising to 19.7% in 2028. The final uprating will be set in spring 2027.

The open questions. The debate pits those who prioritise a stable pension level (SPD, unions) against those who stress the cost for contributors and the federal budget (young CDU/CSU MPs, employers, economists). Three trade-offs: (1) age and the end of retirement at 63; (2) the pension level after 2031; (3) the role of funded pensions. Citoyen presents these options without taking sides.

Set against its neighbours, Germany has the opposite profile to southern Europe: moderate spending, a late exit from work and retirees less well off than the working-age population.

Three takeaways. (1) Spending: below average. At 11.7% of GDP in 2024 (Eurostat, provisional), Germany spends less than the EU (12.6%), Spain (13.2%), France (15.0%) and Italy (15.9%). (2) Older workers' employment: top of the group. The employment rate of 60-64-year-olds (67.6% in 2025) is far above Spain's (53.0%), Italy's (50.4%) and France's (44.4%). (3) Living standards: lagging. The median income ratio of people aged 65 and over (0.83) is lower than the EU's (0.91), France's (0.97), Italy's (1.00) and Spain's (1.06).

The German model thus funds more modest pensions through longer working lives; the question is whether it can hold the 48% level without a marked rise in contributions after 2031.