Young adults are surprisingly open to paying more to fund state pensions

There is a generational divide when it comes to deciding how to fund Germany’s strained state pension system – or is there? A new study finds that young adults in Germany are surprisingly willing to shoulder higher costs themselves. When confronted with different reform options, they oppose measures that would, in the short run, only affect the older generation. Instead, they would prefer to pay higher pension contributions or to further expand subsidies from the federal budget. 

The 2025 MetallRente youth study Jugend, Vorsorge, Finanzen, published today, surveyed a representative sample of 2,500 men and women in Germany aged between 17 and 27 about their understanding and attitudes toward finances and retirement provision. Hertie School Professor of Economics Christian Traxler talks about the study results – and their implications.
 

Politicians often talk about a divide between burdening young working adults with expensive public pension contributions on the one hand and the financial needs of the elderly on the other. Your findings do not support this idea.

Our study surveyed young people about how to "save" Germany’s public pension system. We asked them whether they would prefer to cut pension payments, increase the minimum retirement age, increase pension contributions, or further expand cross-financing from the general budget – which ultimately means higher taxes. 

Much to our surprise, between 68 and 72 per cent said they would support higher tax subsidies, as opposed to lowering pension payments or raising the public pension age. That is, rather than favouring policies that would harm older folks right now, the young would opt for something that harms them. Essentially, they seem to be willing to face a higher tax burden.

That sounds positive. Is it?

The positive thing is that the young generation is showing solidarity with the elderly. We see much less of a divide than is often claimed in the public discourse – which has often been framed under the paradigm, “We cannot leave a mountain of debt to the next generation.”

The negative take is that the young adults’ preferences would entail huge financial burdens. Without any major reform, the demographic trend over the next decades – that is, more and more boomers retiring and receiving very high pension payments – will bring massive funding needs. In recent years, more than 100 billion euros of the federal budget were already going toward subsidising public pensions annually. The demographic change and politicians handing out election presents – keyword: Mütterrente* – implies that this number will continue to increase significantly. 

“We need a broad public discussion that goes beyond ‘your pensions are secure’.”

This trend will amplify the pressure on Germany’s public budget. Even if Germany’s economy would return to a strong growth path again, it would require strong tax increases to make this fiscally sustainable.

Does this represent a lack of financial literacy on the part of the respondents?

It’s plausible that 17- to 27-year-olds – like other age groups who express similar preferences in similar surveys – don’t grasp the magnitude of the expected funding gap. This interpretation is consistent with other evidence that directly captures limited knowledge and poor financial literacy. In fact, our data indicate that the young adults are indeed aware that they need better financial education, with only a third of respondents saying they are knowledgeable about funding their retirement. And they look to the state for support. A vast majority advocates more education on economics and finance, with 87 per cent saying that retirement planning should be covered in school. 

So the solution lies with the state?

I don’t think it’s that easy. Yes, we certainly need to strengthen young adults’ financial literacy. Young adults are seriously worried about their future pensions; they have a good sense that they should better take care of their own pension provisions – without exactly knowing how best to do that. Better education can clearly help here.

But we also need a broad public discussion that goes beyond “your pensions are secure”. The young generation, as well as the remaining electorate, would benefit from an honest discourse that acknowledges and explains the problems in the pension system. This should set the stage for a meaningful discussion about pension reforms. Without that, I’m afraid that we are stuck with the status quo: Germany’s politicians shy away from much needed reforms and expand tax-funded subsidies to the public pension system.

About the MetallRente study

The MetallRente study Jugend, Vorsorge, Finanzen is the largest representative longitudinal study on the retirement preparations of young people in Germany. Every three years, 2,500 young people between the ages of 17 and 27 are asked about their ideas for their personal future, their savings behaviour, their financial knowledge, and their attitudes and personal strategies for retirement provision. MetallRente works with the research institute Verian to collect and analyse the data.

The sixth edition of the study was published on 11 June 2025. The study was led by Hansjörg Müllerleile and Kerstin Schminke, Managing Directors of MetallRente, Professor Carmela Aprea, Chair of Economic and Business Education at the University of Mannheim, and Christan Traxler, Professor of Economics at the Hertie School. 

MetallRente is a pension fund offering occupational and private pension schemes as well as coverage for occupational disability and incapacity for work, basic skills, nursing care and surviving dependants. 

*Editor’s note: The Mütterrente, or mothers’ pension, gives mothers (and fathers) who take parental leave to care for their children credits toward their pension.

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