Increased pension contributions proposed in reform outlines
In a significant move, the German government has unveiled a comprehensive pension reform plan aimed at securing pension levels and addressing equity gaps for parents who raised children. This announcement was made on Mi06.08.2025 at 19:30 PM by Middle German Broadcasting.
The reform includes two key elements: an increase in pension contributions and an expansion of the mother's pension (Mütterrente). From 2027, pension contributions will rise by 0.2 percentage points, reaching 18.8% of income, with half of the increase borne by employers and employees (9.4% each). This adjustment is designed to maintain the statutory pension level at 48% of net income until 2031, known as the "holding line" (Haltelinie).
Regarding the mother's pension, the reform increases pension benefits for parents who had children before 1992. This measure, dubbed Mothers' Pension III, will provide about €20 more per month per child, effective from January 1, 2027. The estimated annual cost of this expansion is approximately 5 billion euros.
The federal cabinet has initiated a series of bills to implement this reform package, which reflects the government’s commitment to pension sustainability amid demographic challenges and to address equity gaps for parents who took time off work for child-rearing and thus contributed less to social security.
View the video for more details on this significant pension reform in Germany.
[1] Source: German Federal Ministry of Finance [5] Source: German Federal Statistical Office
- The German government's pension reform plan also includes improvements in personal-finance, with an emphasis on business by including an increase in pension contributions from 2027, affecting both employees and employers.
- To address equity gaps for parents who raised children, the federal cabinet has proposed Mothers' Pension III as part of the pension reform, resulting in an additional €20 per month per child for those who had children before 1992, acknowledging the impact on their personal-finance and business careers.
