BERLIN — German Chancellor Friedrich Merz pledged to implement a proposed reform of the nation's pension system during a speech on June 23, 2026, at the Federation of German Industries (BDI) Day of Industry conference in Berlin. Merz stated his intention to fully and promptly implement the recommendations developed by a government-mandated commission.

Earlier that day, the panel of experts and politicians delivered 33 recommendations designed to stabilize the pension system. Among the central proposals was raising the retirement age gradually in line with life expectancy, which would begin in 2031. The commission also proposed introducing market investments as a component of individuals' pension insurance, a model similar to one used in Sweden.

"Fewer and fewer contributors have to finance pensions for more and more retirees," Merz said. He added, "Failure is not an option." The aim of these recommendations is to stop pensions from decreasing and prevent a large, long-term increase in the levy employees pay into the system. Currently, employees in Germany contribute 18.6% of their gross wages to the pension system.

The coalition of center-right and center-left parties, led by Merz, took office just over a year ago. Germany's economy returned to modest growth last year after shrinking for two years in a row. The government expects economic growth of 0.5% this year. Germany has a population of 83.5 million people.

Two decades ago, Germany increased its regular retirement age from 65 to 67, a change that was implemented gradually. The recent commission's proposals include scrapping a provision that allows individuals to retire at 63 without financial penalty after 45 years of contributions. The panel also recommended raising the minimum retirement age to 64 and moving the age at which people can start reducing their working hours before retirement from 55 to 58. Labor Minister Bärbel Bas, co-leader of the center-left Social Democrats, also indicated her intention to implement the commission's proposals.