Like many Western European countries, Germany has an aging population that needs to be cared for in retirement, but who also make up a key voting bloc, especially for the two main coalition parties — SPD and CDU.
The parties had agreed to a pension reform in their coalition agreement that would lock in pensions at 48% of the average income until 2031.
Another key aspect is the introduction of the “active pension” that aims to encourage pensioners to keep working voluntarily.
But it is the cost of the pensions that has created a fracture within the coalition government, with the 18 Young Union members of the Bundestag threatening to vote against the reform. The government only has a 12-seat majority.
The plan to keep pensions in line with incomes is expected to cost the state €11 billion ($12.77 billion) by 2031 and up to €15 billion a year after that if the pinned rate increases, which is what the SPD wants.
The coalition has refused to make changes to the reform to appease the rebellious lawmakers, but Merz has offered a discussion on even deeper reforms for the pension system after 2031.
On Monday, the Young Union continued to say it could not vote in favor of the bill, but stopped short of a full rebellion, saying that each member could vote independently.
On Tuesday, the Union is set to discuss the legislation and hold a test vote to see if they have the numbers ahead of Friday’s real vote.
SPD’s co-leader Bärbel Bas has said that a failed vote then could stall all further legislation and threaten Merz’s government.
Young Vs Old? How a fight over pensions is shaking the German government
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