Germany’s pension commission has issued a report calling for the statutory retirement age to be increased by eight months for every additional year of average life expectancy. The proposal is part of a wider package that, according to the German Ministry of Labour, includes measures to raise benefits for low‑income earners and to strengthen system solidarity.

Why the change?

Europe’s pay‑as‑you‑go pension systems rely on current workers funding the pensions of retirees. As life expectancy rises, the balance between contributions and payouts is strained. The commission’s recommendation follows similar reforms being considered or already implemented in France, Sweden and Denmark.

Life expectancy is not uniform

In Germany, life expectancy varies markedly by gender, income, occupation and health status. Women live longer on average than men. Higher‑income individuals also tend to outlive lower‑income individuals. Among German male pensioners, those in the highest income decile live seven years longer than those in the lowest decile. From 1997 to 2016 the poorest 20 % of German men saw life expectancy rise by 1.7 years, while the richest 20 % saw an increase of 3.6 years.

Comparable gaps exist in France. The 5 % of French men with the highest incomes are projected to live 13 years longer than the 5 % with the lowest incomes, and the gap for women is eight years. French pension analysts have reported that women receive €1.44 in benefits for every €1 contributed, whereas men receive a smaller return. A low‑earning French man receives €0.96 in pension benefits for each euro contributed, while a higher earner receives more than €1 per euro.

Wealth implications

Pensions form more than half of total assets for the poorest half of German households, but only about 3 % of total assets for the richest 1 % of households. This disparity means that any reform to the retirement age will affect wealth distribution.

Calls for a nuanced approach

The European Trade Union Confederation has urged that reforms consider gender and income differences to protect the most vulnerable. Experts have suggested a differentiated retirement age based on gender and occupational risk as a way to reduce inequities. Another proposal is to adjust contributions and benefits according to individual life‑expectancy forecasts, although this raises privacy and administrative concerns. A further suggestion is a lifelong‑earnings model where pension benefits are linked to total career contributions and adjusted for actual years lived after retirement.

European oversight

The European Commission is monitoring the impact of pension reforms on social cohesion and fiscal sustainability across the EU. A recent Commission report warned that pension policies ignoring demographic heterogeneity could increase wealth inequality and reduce public confidence. EU average life expectancy reached 81.5 years in 2024, an increase of more than two years per decade since the 1960s.

Next steps

The commission’s recommendation is expected to trigger negotiations with trade unions, pension insurers and civil‑society groups. The outcome will shape how Germany balances the financial pressures of an ageing population with the need to maintain fairness across gender, income and occupational lines.