Germany’s parliament has passed a significant pension reform package, despite dissent within Chancellor Friedrich Merz’s ruling coalition. On Friday, lawmakers voted 319-225 in favor of the legislation aimed at maintaining state pensions at 48% of average wages through 2031. There were also 53 abstentions recorded during the vote.
The package has faced internal opposition from a group of 18 young lawmakers within Merz’s center-right Union bloc. This faction raised concerns about a provision set to take effect post-2031, which proposed that pension levels would be marginally increased compared to current laws. Critics warned that this change could incur costs of up to 15 billion euros ($17.5 billion) annually, ultimately impacting younger generations. In contrast, Merz’s junior coalition partners, the center-left Social Democrats, insisted on the package being passed without alterations, a stance that Merz supported.
In addition to sustaining pension levels, the reform package includes measures favored by Merz’s conservative bloc, such as a tax break designed to encourage retirees to remain in the workforce longer. To appease the dissenting lawmakers, coalition leaders have promised a commission will develop proposals for a more comprehensive pension reform by mid-2026, as Germany contemplates the implications of an aging population.
Merz was keen to demonstrate his control over the parliamentary majority, pushing for approval from the full house of 630 lawmakers, even though this consensus was not strictly necessary. Securing a majority on Friday helped him avoid potential embarrassment regarding reliance on abstentions from the opposition Left Party.
The approval comes against a backdrop of challenges faced by Merz’s government since taking office, including the need to prevent internal disputes that plagued the previous administration led by Olaf Scholz, which collapsed last year. Merz himself experienced difficulties during his election as chancellor, having required two rounds of voting to secure the position in May, and he has confronted recent discord over a nominee for Germany’s highest court.
Acknowledging the situation, Merz stated that his coalition has engaged in “too many public discussions” since assuming power, highlighting the importance of revitalizing Germany’s sluggish economy and addressing irregular migration. Meanwhile, public opinion appears to be swaying, with declining support for Merz’s government and an uptick in backing for the far-right Alternative for Germany party following the national elections earlier this year.
