German Care Reform to Slash Pension Contributions for Family Caregivers as EU Overhauls Social Rules

Germany is preparing to cut pension contributions for relatives who care for family members by 30 percent starting in 2027, part of a sweeping reform meant to close a projected €7.6 billion shortfall in the long-term care system. The draft legislation, tabled in June 2026, would also reduce or eliminate benefits for those with low care grades while raising contribution rates for high earners and childless individuals.

The care package is one element of a broader reform blitz the German government aims to finalize before the summer parliamentary break. Also on the table: income tax relief for low- and middle-earners effective January 1, 2027, and recommendations from an expert commission on long-term pension financing, expected in mid-June. Among the options being debated are incentives for working longer and a proposal to bring members of the Bundestag into the statutory pension system.

Across the border, the European Union has agreed on the most significant overhaul of its social security coordination in years. An accord reached in April 2026 amends Regulations (EC) No 883/2004 and 987/2009. Under the new rules, posted workers will need to prove at least three months of prior insurance coverage in the sending country — a measure designed to curb abuse of social systems. The procedures for A1 certificates, which document which country’s social law applies to cross-border employees, will be digitized and accelerated. Most provisions take effect 24 months after the regulation enters force.

For cross-border commuters — particularly those working in Switzerland and similar countries with high numbers of inbound employees — a structural shift looms for unemployment benefits. Future responsibility for paying jobless benefits will lie with the country of last employment, not the worker’s place of residence. This change could come into effect in 2028.

Austria, meanwhile, moved forward pay-transparency rules in June 2026 by presenting a draft law transposing the EU directive. Companies with at least 100 employees will have to publish regular income reports; job advertisements must include salary ranges; and individual workers will gain a right to request information about pay levels. Business associations complain about the administrative burden, while employee representatives welcome the push against the gender pay gap.

Germany is also revisiting its working time law. The government is considering switching from a daily to a weekly maximum working hours model — but the labor ministry is tying any flexibility to conditions such as collective bargaining coverage and mandatory electronic time tracking.

The sheer volume of simultaneous legislative projects has drawn warnings from Germany’s federal states, who say the parliamentary process risks being overwhelmed. A coalition committee scheduled for late June 2026 is expected to set priorities and try to head off a blockage in the Bundesrat.

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