Christian Democratic youth rejects pension reform plan that guarantees benefits through 2031.

During a forum organized by Süddeutsche Zeitung on Monday, German Chancellor Friedrich Merz said demographic change is working against preserving current levels of public pensions.

RELATED:

French Unions Press Lecornu Over Austerity and Pension Reform

“We know that the level of public pensions cannot be maintained in the long term, since that would require either higher contributions or increased federal funding for the pension insurance system. Therefore, corrections will be necessary starting in 2031 as part of a reform,” he said.

Germany’s pension reform has sparked internal debate within the Christian Democratic Union (CDU), Merz’s party, after its youth organization rejected an agreement reached by leaders of the governing coalition and threatened to derail it.

The coalition holds a 12-vote majority in the lower house of Parliament. If the 18 lawmakers from the Young Union (JU), which represents the CDU’s youth wing, rebel, the bill could not be approved.

The draft legislation was approved unanimously by the Cabinet, meaning its rejection would be a major setback for the government and mark the second time that a Merz-endorsed compromise failed due to opposition within his own parliamentary group. The first was the failed election of a judge to the Constitutional Court in July.

The JU’s criticism focuses on a provision requiring that public pension levels remain stable at 48% of average wages at least until 2031. This would mean an additional cost to the pension system estimated at 120 billion euros. That provision was not originally in the coalition agreement but was added at the request of the Social Democratic Party (SPD) and accepted by the CDU and its Bavarian sister party, the Christian Social Union (CSU).

In exchange, the SPD accepted including the CDU’s proposal for “active retirement,” allowing people who have reached retirement age and continue working to deduct up to 2,000 euros from their taxes, regardless of whether they are receiving their pension.

The JU argues that, due to demographic change and an aging population, maintaining pension levels will place the financial burden primarily on younger generations.

The CDU/CSU has sought to divide the issue into two parts: the compromise with the SPD, viewed as a temporary arrangement for the coming years, and plans for a broader reform that will be drafted by a commission created by the government for that purpose.

Merz emphasized the need to strengthen the two other pillars of retirement — private pension plans and employer-subsidized retirement plans.

On Monday, SPD Secretary Tim Klüssendorf said maintaining public pension levels is essential because most of the population depends on them in old age.

“For us it is clear that public pensions are the instrument most people consider when thinking about securing their old age. Keeping pension levels at 48% of net wages is key to ensuring people can live off their retirement income,” he said after a meeting of the party leadership.

Klüssendorf also said pensions cannot be viewed solely as expenses that can be cut, because they represent something people have worked for.

“Those who advocate most strongly for possible reductions are often people who, due to their social and economic position, do not depend on public pensions,” he said and rejected the notion that the debate is a generational conflict, arguing it is instead a divide between rich and poor.

teleSUR/ JF

Source: EFE

IN THIS ARTICLE