The Federal Court of Auditors warns that the burden on the federal budget caused by rising pension payouts is increasing consistently. According to a new report submitted to the German Bundestag Budget Committee, the federal government is projected to need to transfer 36.7 percent of all federal tax revenue to the pension fund by 2040, an increase from the current rate of around 29 percent.
The report, which was covered by the “Frankfurter Allgemeine Zeitung”, further states that with the proposed pension reform package, the necessary financial contribution could even rise to nearly 46 percent of tax revenue.
The auditors cautioned against watering down the major pension reform announced by the government without thoroughly assessing the cost implications. The Court of Auditors noted that while some burdens might be eased, the focus must remain on preventing the federal budget from being used excessively or unilaterally. The reform concept presented by the Pensions Commission stipulates responsibilities for all stakeholders-retirees, contributors, and the federal budget-but the report indicates that no cost limitation has been established for the federal household.
A major financial risk identified by the auditors lies in the plan to permanently benefit new pensioners from a so-called pension level guarantee. While a new capital pension is intended to secure the long-term financing of this guarantee, if its introduction is delayed or if its returns prove low, the federal budget would be forced to step in and cover the difference.
The Court of Auditors also critically examined the initial pension package adopted by the coalition government in late 2025. This package, which raised maternal pensions and removed the demographic factor in the pension formula until 2031, is estimated by the report to incur total follow-up costs of 210 billion euros for the budget by 2040.
