Germany’s Coalition is facing criticism over a pledge to fund the costs of its pension package through the federal budget rather than pension contributions. The government is now moving toward reducing its planned contribution to the pension fund, potentially shifting more costs onto workers and employers.
The package includes a pension-level “holding line,” which suspends the demographic factor, and higher pensions for mothers. Its total cost is estimated at just over €200 billion over 15 years.
A draft budget published in July proposed cutting the federal subsidy to the pension fund by €1 billion in 2027. The coalition is now considering a reduction of as much as €3 billion, according to the report.
The move would depart from the government’s earlier assurance that the package’s costs would be covered entirely by the federal budget. The report argues that younger people and the shrinking group of pension contributors could bear more of the financial burden as a result.
Sources: FAZ.