Streamlining Administrative Processes and Enhancing Active Pensions: The Coalition's Agenda

The German government is gearing up for a series of reforms, with a focus on streamlining and modernizing the social state. The ruling political parties – CDU, CSU, and SPD – are at the helm of these changes, aiming to make the system more efficient, citizen-friendly, and effective while maintaining social protection levels.

The reforms, scheduled for the autumn, are being led by a Commission for Social State Reform, headed by Department Head Nermin Fazlic (BMAS). The commission comprises representatives from nine ministries, five federal states, and municipal top associations. Their primary task is to reduce bureaucracy and modernize the social state.

Key areas of focus include examining tax-financed benefits such as citizen's income, housing allowance, and child supplement. There are plans to consolidate social benefits, speed up administrative processes, and promote digitalization of application and processing procedures.

One of the proposed changes is an increase in the contribution assessment ceiling in both the general pension insurance and the statutory health insurance. From January 1, 2023, the contribution assessment ceiling in the general pension insurance will rise from 8,050 euros per month to 8,450 euros. In the statutory health insurance, the contribution assessment ceiling will increase from 5,512.50 euros per month to 5,812.50 euros next year.

However, a dilemma arises parallel to these increases, as an increase in additional contributions in the GKV is also expected, according to Dennis Radtke.

The reforms also extend to the introduction of an "active pension", with a draft expected soon and its introduction agreed upon for January 1, 2026. The Green Party leader, Franziska Brantner, suggests that progress can be made through more digitization, automation, and bundling in the processing of social benefits.

The SPD is also considering taxing high earners more heavily, a proposal not mentioned in the coalition agreement. However, the nature and scope of the reforms have not been fully disclosed, and the specific details are yet to be finalized.

The CDU General Secretary, Carsten Linnemann, has announced a session dedicated to reducing bureaucracy in the fall. The reforms, while ambitious, are expected to be implemented in the near future, marking a significant shift in the German social state.

Existing data is also expected to be digitally exchanged between the authorities of the federal government, states, and municipalities, according to the independent norm control council. The reforms are being debated and deliberated upon by the German government, with the aim of creating a more streamlined and efficient social state for all citizens.