The German government has approved a multi-billion euro package aimed at safeguarding the nation’s pension level. The legislative proposal, presented by Labour Minister Bärbel Bas (SPD) and adopted by the cabinet on Wednesday, includes provisions for expanding the “mothers’ pension” benefit, a historically sensitive point of discussion.
The new law guarantees a pension level of 48 percent of the prevailing average wage until 2031. Projections indicated that, without intervention, this level could decline to 47.0 percent by 2031 and to 45.0 percent by 2040. The cost of these adjustments will be fully covered by the federal budget, escalating to a double-digit billion-euro sum from 2027 onwards.
Alongside the pension package, the government also initiated the process for the implementation of what has been termed the “Tariff Loyalty Law”. This legislation mandates that employers bidding for public contracts will be contractually obliged to adhere to applicable wage standards when executing those contracts. The government’s stated intention is to strengthen the commitment to collectively agreed wage rates.