Without these reforms, retirees would have more money

Special effects

Without these reforms, pension funding will increase more sharply in 2026

November 15, 2025 – 05:49Reading time: 4 minutes

Labor Minister Bärbel Bas (SPD) and Chancellor Friedrich Merz (CDU): The SPD wants to stick to the pension package, the Chancellor has not taken a clear stance. (Source: M. Popow/imago-images-bilder)

The government actually wants to do something good for retirees in the long term with pension packages. However, for 2026 it would be better if that didn’t happen.

After Merz initially stated that he understood “the bottom line,” he recently refrained from making a clear statement. One such event is now expected to take place on JU Germany Day in Rust. According to reports in the newspaper “Bild”, the Chancellor is said to be behind the draft law of the Minister of Labor Bärbel Bas (SPD).

Amid the noise of political bickering, an interesting development is almost lost: For retirees, for once, it will even have a slightly positive impact if, contrary to expectations, the pension package does not make it through the Bundestag. Then the so-called holding line of 48 percent will end next year – with the consequent calculation of pension adjustments in July.

But why would a lack of pension reform lead to larger pension increases? A stable pension level is actually intended to ensure that the increase in pension funds is greater than the condition of an aging society. The reason for this curiosity is a one-time special effect that will not take effect in 2026 when the line stops being extended.

“This has to do with the end of the inflation premium,” Gunkel explained. This applies from October 2022 to December 2024. Employers can pay their employees up to 3,000 euros, tax and social security free. Often they do not do this as a supplement to their salary, but instead pay out a portion of their normal income as a tax-free bonus. Therefore, this income is not included in the relevant wages and salaries for calculating pension increases.

“If we assume that what was paid in the form of an inflation premium is now returned through the levy of fees, then wages will rise even more sharply,” Gunkel continued. Roughly speaking, this means that the ratio of workers’ income to pension funds is growing better despite demographic changes. Under normal circumstances, this would lead to sharper pension increases. But things should change as a result of the planned law.