Coalition stumbles into the fall

The Union and the SPD can not agree on a pension reform to secure both the amount of contributions and pensions for the next six years.
Finance Minister Scholz (SPD) wants to give the citizens a “guarantee” for long-term stable pensions.
Chancellor Merkel and CSU leader Horst Seehofer gave the request a rejection.
By Nico Fried and Kristiana Ludwig, Berlin
The grand coalition has already returned to the end of the political summer break. The CDU, CSU and SPD continue to struggle for a pension reform after a peak meeting this weekend to secure both the amount of contributions and pensions for the next six years. Chancellor Angela Merkel (CDU) and CSU leader Horst Seehofer gave the demand of Finance Minister Olaf Scholz (SPD) a refusal to continue to fix the pension level over the year 2025. Both urged the Social Democrats to stir up uncertainty with appropriate initiatives.

Merkel, Seehofer and Scholz had negotiated for several hours during the night of Sunday, without reaching final results. The Chancellor said afterwards in the ARD, one is on a “very good way”. But now also the group chairmen of the coalition should be involved. Seehofer and Scholz were also confident that the reform could soon be launched.

The controversial bill by Federal Labor Minister Hubertus Heil (SPD) includes only proposals that have already been agreed in the coalition agreement. For example, people who retire earlier from work because of illness should receive a better disability pension, and the so-called maternity pension should in future benefit more citizens. However, the Union has apparently made its commitment to a more significant reduction in unemployment insurance contributions than previously agreed. SPD politicians accuse the coalition partner therefore a blockade.

Conversely, Scholz had last demanded to guarantee stable pensions until the 2030s. However, he had left the financing open. During a survey by citizens in Berlin, he now pointed to government revenues, which could possibly increase in the future. The federal budget could reach perhaps 500 billion euros in 2030, he said, “so much more than now.” Then it would be easier to put additional tax funds into the pension. Scholz said that he wanted to give the citizens a “guarantee” for long-term stable pensions: “I want there to be a political consensus in Germany about that.”

There is nothing in the current pension package, though. The guarantee here only covers the period up to the year 2025. How to finance the pensions after that, is currently being discussed by a commission that did not start work until June. Merkel and Seehofer demanded not to anticipate this commission. “Communicating something different every day rather sharpens the uncertainty,” Merkel said.

The fact that the coalition partners are now discussing unemployment insurance contributions instead of pensions is linked to a surprising increase in long-term care insurance contributions. According to Health Minister Jens Spahn (CDU) they should increase by 0.5 percentage points. Therefore, he had demanded a discharge elsewhere.

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