Merz government is planning major pension reform: mothers' pension will be increased!

Merz government is planning major pension reform: mothers' pension will be increased!

The Merz government, consisting of the Union and the SPD, is planning comprehensive reforms in the area of ​​pensions. This initiative aims in particular to relieve the financial burden on mothers and to ensure greater recognition of time spent raising children. This was discussed in the coalition committee on May 28th, where an “immediate program” with around 60 measures was approved to facilitate investments and promote the economy. A central goal of the pension reform is to secure the pension level of 48 percent of average income until at least 2031.

The reform includes not only the already established programs, but also new models such as the active and early start pension. These are intended to help make the pension system future-proof and meet the challenges of demographic change. In particular, the mother's pension, which has been in force since January 1, 2014, will play a key role in this reform. Currently, parents receive up to 2.5 years of child-rearing credit for children born before 1992, while three years of child-rearing are recognized for children born since 1992.

Expansion of the mother's pension

A key element of the reform is the planned introduction of mother's pension III, which is intended to increase pension points for all parents to three per child, regardless of the year of birth. The current value of a pension point is 39.32 euros and will be increased to 40.79 euros on July 1st. These measures could come into force from 2026, but are still in the planning phase. Financing this reform is seen as problematic. The costs for crediting child-rearing periods amount to around 25 billion euros for 2023 and could rise to 27 billion euros by 2027. A possible expansion of the mother's pension III could cause additional costs of around 4.5 billion euros.

In order to secure the financial basis of these reforms, the government plans to finance the additional expenditure through tax revenue. This is intended to minimize the burden on employees. A pension increase of 3.74 percent is also expected by July 1, 2025, which corresponds to a monthly increase of 66.15 euros for a standard pension after 45 years of contributions. This increase will benefit approximately 21 million pensioners, which indicates the urgency of the reform proposal.

Future prospects for pension reform

The new federal government has committed itself not only to keeping pension entitlements stable, but also to distributing the financial burden more fairly. Given the declining number of contributors and the increasing number of pensioners, the pension system is under pressure. A pension commission will develop reform proposals and examine the introduction of a uniform pension system that also includes the self-employed, civil servants and members of parliament.

With these comprehensive reforms, the Merz government is pursuing the goal of stabilizing the pension system in Germany in the long term and meeting the current challenges of demographic change. While the implementation of the reforms is still in its infancy, the need to secure future pension provision is becoming increasingly urgent.