The decision, reached during a recent coalition committee meeting, aims to eliminate longstanding disparities in pension entitlements between parents of children born before and after 1992. However, business leaders have voiced strong criticism of the plan.
For Markus Söder, leader of the CSU, the agreement marked a major political victory. The CSU had pushed for this change during the last federal election campaign, arguing that parents—especially mothers—whose children were born before 1992 currently receive fewer pension points than those with children born later. The reform seeks to close this gap, resulting in increased retirement benefits for affected parents.
What Is the Mütterrente?
The term Mütterrente can be misleading, as it does not denote a separate type of pension like disability or early retirement. Instead, it refers to an additional entitlement within the statutory pension insurance system. The benefit is intended to compensate parents—usually mothers—who reduced their working hours or left the workforce to raise children, resulting in lower pension contributions and ultimately smaller pensions.
The Mütterrente was first introduced in 2014 and expanded through a reform known as Mütterrente II in 2019. While fathers are technically eligible to apply for the benefit if they were primarily responsible for childcare, the German Pension Insurance (DRV) has reported that women are overwhelmingly the recipients in practice.
Current Rules and Planned Changes
The benefit is calculated using standard pension rules, which estimate a parent’s earnings during the child-rearing period. For each year of recognized childcare, parents receive one pension point, currently worth €40.79 per month.
Under the 2019 reform, parents of children born before 1992 are credited with up to two and a half years of child-rearing time, while those with children born after 1992 receive up to three years. The proposed change will grant the full three years to all parents, regardless of the child’s birth year.
When Will the Reform Take Effect?
Originally, the reform was scheduled for 2026 under the coalition’s early legislative program, but it was later delayed to 2028 due to technical concerns. The DRV had warned that implementing the change earlier was unrealistic because it would require reviewing and adjusting approximately ten million existing pension records. Anja Piehl, chair of the DRV board, emphasized the enormous administrative burden involved.
The coalition committee has now agreed on a compromise, setting the new start date for January 1, 2027. If the pension insurance system is not fully prepared by then, eligible recipients will receive back payments once implementation is complete.
Business Groups Condemn the Expansion
The planned reform has drawn sharp criticism from several industry associations. Business leaders accused the government of neglecting more urgent economic needs in favor of politically motivated pension increases. Dirk Jandura, president of the Federation of Wholesale, Foreign Trade and Services (BGA), criticized the government for prioritizing pension benefits while failing to deliver on promised relief for companies and households facing high energy costs.
“There seems to be plenty of money for unnecessary pension giveaways, but not for urgently needed improvements to strengthen the economy,” said Jandura.
Jörg Dittrich, president of the German Confederation of Skilled Crafts (ZDH), also spoke out. “If key relief measures that have been promised multiple times are not implemented, while expensive prestige projects are launched, confidence in political reliability erodes among businesses,” he said.
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