Germany Debates Pension Reform: Retirees May Face Social Service

In August 2025, Marcel Fratzscher, president of the German Institute for Economic Research (DIW), proposed a mandatory social year for retirees. Speaking to Der Spiegel, he argued that older generations should contribute more to ease the burden on younger workers. The idea comes as pension reforms and rising costs spark heated debate across the country.

Germany’s pension system is under growing strain. The state already pumps vast sums into pensions, yet contribution rates keep climbing. Now, the coalition government is considering raising the income threshold for pension contributions—a move that could cost taxpayers an extra €11 to 15 billion annually.

The current system relies on a shrinking workforce to support a growing number of retirees. At the same time, younger generations face higher payroll taxes, income levies, and even the prospect of compulsory military service. Long-term care costs have also surged, with one in three seniors in care homes now relying on state aid.

Fratzscher’s proposal suggests retirees could help balance the scales. By dedicating a year to voluntary work—such as supporting schools or mentoring disadvantaged students—they could demonstrate solidarity. The idea aims to shift the pension debate, which currently places most financial pressure on younger workers while leaving older generations largely unaffected.

A mandatory social year might also signal that society expects shared responsibility. With boomers living longer and healthier lives, Fratzscher argues they should play a more active role in easing generational tensions.

The proposal arrives as Germany grapples with an ageing population and rising welfare costs. If adopted, a social year for retirees could reshape how society views generational fairness. For now, the government must weigh the financial and social implications of such a policy shift.