Federal Minister of Health · since 29 July 2026
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Economy · Old-age provision
An 18.6% contribution rate, a 48% pension-level guarantee and a statutory retirement age rising to 67. Germany’s pay-as-you-go pension system rests on these numbers — and on a ratio of workers to pensioners that is about to shift sharply.
01 / Economic analysis
The general pension insurance (gesetzliche Rentenversicherung) works on a pay-as-you-go basis: today’s contributions pay today’s pensions. There is no large capital stock; the sustainability reserve held by the Deutsche Rentenversicherung (DRV) amounted to €32.68bn in August 2026, enough for about 1.04 months of expenditure.
Revenue comes from two sources. Contributions of 18.6% of gross wages, split equally between employer and employee, provide the larger part. The federal government adds subsidies from the general budget, officially to cover benefits not backed by contributions — for example child-raising periods. In 2025 these subsidies came to €93.18bn.
In 2025 the general pension insurance took in €417.4bn and spent €421.3bn, a deficit of €3.9bn financed from the reserve. That is not a crisis, but it shows how little margin the system has before rising pensioner numbers translate into higher rates or larger subsidies. A DRV model calculation reported in spring 2026 expected the contribution rate to stay at 18.6% in 2027 and rise to 19.9% in 2028.
SourceDeutsche Rentenversicherung, Kennzahlen zur Finanzentwicklung. Deficit 2025: −€3.9bn.
Federal subsidies amount to more than a fifth of pension insurance revenue. They are also one of the largest single items in the federal budget, which is why pension policy is always fiscal policy as well.
The pension level — the standard pension relative to average earnings, before tax — is the political anchor of the system. The 2025 pension package fixed it at no less than 48% until 1 July 2031 (Haltelinie), suspending until then the sustainability factor that would otherwise slow pension increases as the ratio of pensioners to contributors rises.
Around 21.5 million people received a pension from the statutory system in mid-2025, according to DRV data reported by secondary sources. The number of pensions paid (25.49 million in August 2026) is higher because some people receive more than one, for example an own pension and a survivor’s pension.
Status as of October 2026.
The pension-level law passed with 318 votes in favour, 225 against and 53 abstentions — just above the chancellor’s majority of 316. It keeps the pension level at 48% until 2031 and extends child-raising credits (Mütterrente) to three years for all children. The Aktivrente and occupational-pension laws passed alongside it. In force
Employees past the statutory retirement age can earn up to €2,000 a month free of income tax; health and care contributions remain payable. Self-employed people and civil servants are not covered. In force
The Alterssicherungskommission hands its report with 33 recommendations to the federal government. Under review
The coalition committee states its intention to implement all 33 recommendations quickly, aiming to complete legislation by the end of 2026. Proposed
No official draft had been published by October 2026. Press reports described differences in the coalition over pace and over provisions for people with long contribution records. Open question
Economic analysis
A pay-as-you-go system has only three dials: contributions, benefits and the age at which one turns into the other.
In any pay-as-you-go pension system, an ageing population must be absorbed somewhere. If the ratio of pensioners to contributors rises, then contribution rates go up, pensions grow more slowly relative to wages, the retirement age rises — or the state adds more tax money, which is a fourth dial that ultimately relies on the same taxpayers.
Germany has used all of them. The statutory retirement age is rising step by step from 65 to 67 under legislation of 2007; people born in 1964 or later will reach the regular age at 67, in 2031. The sustainability factor, introduced in the 2000s, slows pension increases as the demographic ratio worsens, but has been suspended by the 48% guarantee until 2031. Contribution rates have been held at 18.6% since 2018 with the help of rising federal subsidies.
The 2025 package chose to protect the benefit level until 2031. The commission’s recommendations of June 2026 would, after 2031, use the age dial gently (linked to life expectancy) and the benefit dial again (sustainability factor), while adding a funded component. Every option distributes costs between generations differently, which is why pension reform in Germany is rarely settled for long.
Working beyond the statutory age is already possible, with supplements for each month of deferred pension. The Aktivrente adds a tax incentive to that existing option rather than changing the age itself, a distinction its supporters emphasise.
Key recommendations as summarised by the Federal Government (2 July 2026) and the DRV (23 June 2026). These are the commission’s proposals, not Linnemann’s.
After 2031, link further increases to life expectancy, with gains split 2:1 between working life and retirement. This would raise the age from 67 to about 67.5 between 2031 and 2041; if life expectancy stalls, so would the age.
From 2031, pensions should again rise more slowly than wages to reflect the changing ratio of pensioners to contributors.
A mandatory, capital-funded supplement with individual accounts, financed by an extra 2% contribution split between employer and employee, modelled on Sweden.
A total provision level of at least 70% of net income across all three pillars; compulsory coverage for self-employed people without other provision, members of parliament and company executives; mini-jobs largely abolished except for students.
The DRV welcomed the report as a clear commitment to a strong statutory first pillar and called its proposals a basis for upcoming decisions.
His documented pension positions are specific: strong advocacy of the Aktivrente and the view that the 2025 package alone would not secure the system. This page does not attribute other pension proposals to him.
As deputy chair of the CDU/CSU parliamentary group for labour and social affairs from May 2025, Linnemann spoke in the Bundestag’s final debate on the pension package on 5 December 2025. According to the Bundestag’s report of the debate, he called the Aktivrente “das innovativste Element in diesem Rentenpaket” — the most innovative element of the package — and a Paradigmenwechsel, a paradigm shift. He acknowledged that the package alone would not secure the future of the pension system and that further reforms would have to follow through the pension commission.
The Aktivrente fits a theme he had pressed earlier in 2025: that performance must pay for older people too. Its logic is demographic. If more people in their late sixties choose to keep working, they continue to pay health and care contributions, their employers pay pension contributions, and skills stay in firms facing shortages.
As Federal Minister of Health since 29 July 2026, pensions are no longer his portfolio; the Federal Ministry of Labour and Social Affairs leads on the commission’s implementation. His health-ministry statements touch the topic only indirectly — for instance, in September 2026 he said there would be no pension cuts for family caregivers in the long-term care reform.
„Wer aber arbeiten kann, muss arbeiten gehen. Leistung muss sich auch für Ältere lohnen.“
Verification noteThe phrases “das innovativste Element in diesem Rentenpaket” and “Paradigmenwechsel” are taken from the Bundestag’s summary of the 5 December 2025 debate. The full plenary transcript should be consulted for the complete wording.
The 2025 package was contested inside the coalition, including by younger CDU/CSU members of parliament, before it passed.
The pension commission’s package tries to split the difference: a later retirement age tied to life expectancy, the return of the sustainability factor after 2031, compulsory capital funding and wider coverage. Each element has opponents; legislation is still pending.
Occupational and private pensions form the second and third pillars. The commission’s 70% overall target and compulsory capital pension would make them more important. The 2025 package included a law to strengthen occupational pensions.
Every additional year of work adds contributions and delays pension payments. That is why participation of older people, women and migrants is pension policy. See labour market.
Pensioners pay health and care contributions on their pensions, and ageing raises health and care spending. Pension, health and care finances are linked through the same demographics. See demographic change.