German Chancellor Friedrich Merz Delays Cabinet Decision on Equity Pension Reform

German Chancellor Friedrich Merz has scaled back the schedule for the government's planned pension reform. Speaking at the Chamber of Commerce and Industry in Berlin, Merz stated that the cabinet will not approve the capital market portion of the reform, known as the equity pension, before the end of this year. Only the statutory pension law component is set to be passed as a fully drafted bill before Christmas.

According to the Chancellor, the capital market element of the measure will instead be presented to the cabinet only in the form of key points. Merz stated in Berlin that “if we pass the major pension reform in its essential parts in the cabinet before Christmas – formulated in detail for the pension law part, and defined in key points for the capital market law part – then we will enter the new year 2027 with a paradigm shift.”

The announcement marks a further adjustment to the administration's original timeline for the social security overhaul. Merz had previously promised that the reform package would be passed by the Bundestag before the end of the year and enter into force on January 1, 2027. The target had already been narrowed to reaching an agreement within the cabinet prior to the end of the year.

The delay affects a key pillar of the proposal, which followed recommendations submitted to the government on June 22. At an event hosted by employer associations on October 13, Merz had called for swift action from Labor Minister Alexander Schweitzer of the Social Democrats. At that time, the Chancellor stressed that the review period had already taken too long and demanded a fully formulated draft capable of moving quickly through the cabinet, the federal states, and parliamentary groups.

Under the updated plan, the government intends to deal with the statutory pension legislation in the cabinet before the Christmas break. Detailed legal work on the capital market regulations will continue into 2027, when the final legislative package is expected to move forward.

Written by Thorben Thiede thorben.thiede@alpineweekly.com