"Policy matters influencing social dynamics and interactions"

Rising Social Contributions for Future Earners: Though administrative actions are underway, they do not determine the future social policy changes.

, and Administrator

2025 September 16 . 10:23 AM

2 min read

Government legislation and regulations governing interactions and conduct within society

In a move aimed at ensuring a more equitable distribution of financial burden in the welfare state, Germany's SPD Minister of Labour, Bärbel Bas, has proposed an increase in contribution rate ceilings for pensions, long-term unemployment benefits, and health insurance.

Currently, the contribution assessment ceiling for pensions stands at 8,050 euros, while for health and long-term care insurance, it is 5,512.50 euros. Bas's proposal seeks to broaden the tax base by tapping into income from capital and real estate, just as much as income from work.

The Minister's statement comes in light of the growing financial strain on social security funds, which are currently short by multi-billion amounts, and this trend is expected to continue. Spending on care, health, and pensions is projected to increase significantly in the coming years due to demographic changes and increased life expectancy.

The middle class bears the main financial burden of the welfare state, and the adjustment of contribution assessment ceilings is aimed at ensuring that better-off individuals contribute appropriately to its financing. The group of people under 60 is growing at a faster rate than the group under 40 in Germany, further exacerbating the financial strain.

Employees and employers contribute over 60 percent to the overall budget of the welfare state through their social security contributions. To prevent contributions from rising or benefits from being cut, the need for additional sources of revenue is emphasized.

Germany spends around 30 percent of its gross domestic product on social issues, and the implication is that current funding strategies may not be sustainable. Bas's proposal, therefore, is not a question of whether we can afford the welfare state, but of how.

The decision on how to fairly and sustainably finance the welfare state is still pending, and the debate on this issue is expected to continue in the coming months.