The political landscape in Germany is witnessing significant negotiations as the Bundestag embarks on a historic financial package linked to constitutional amendments involving the debt brake. On one side, coalition talks continue between the CDU, CSU, and SPD, which are now unfolding in 17 working groups. As the discussions evolve, several pivotal topics remain contentious, particularly around migration policies, pension reforms, and the future of social welfare.
One of the most pressing issues for Friedrich Merz, the leader of the CDU, concerns migration. Merz has vowed to enforce stringent border controls from the very start of his chancellorship. He stated, "the German state borders to all our neighbors are permanently controlled and without exception all attempts at illegal entry are rejected." However, the coalition’s agreement contains language that is subject to differing interpretations by the CDU and SPD. The draft states, "Wir werden in Abstimmung mit unseren europäischen Nachbarn Zurückweisungen an den gemeinsamen Grenzen auch bei Asylgesuchen vornehmen," which translates to, "We will carry out rejections at the common borders in coordination with our European neighbors, even in cases of asylum applications." The SPD interprets this to mean that agreement from neighboring countries is mandatory, while the CDU insists that coordination does not equate to a requirement for permission.
Pension planning is another critical area under scrutiny. In a statement highlighted in the coalition talks, it is mentioned, "Wir werden die Alterssicherung für alle Generationen auf verlässliche Füße stellen," or "We will place pension security on reliable foundations for all generations." The SPD is advocating for a permanent security of the pension level at 48%. This level, reflecting the ratio of an average earner's pension after 45 years of contributions to the median wage, currently has only a legal guarantee until mid-2025. Without legislative action, demographic shifts threaten to reduce pension levels in the future.
The CDU views the SPD’s plans with caution, suggesting that such adjustments will necessitate higher pension contributions and tax subsidies, thus not aligning with fiscal prudence. Merz has strategically avoided alienating older voters by not opposing pension reforms vigorously during the election campaigning.
Another significant area is the Bürgergeld, or citizen's income, which is set to undergo changes. The coalition’s plan includes increased pressure to accept job offers, particularly for those unwilling to work. The draft notes, "Bei Menschen, die arbeiten können und wiederholt zumutbare Arbeit verweigern, wird ein vollständiger Leistungsentzug vorgenommen," meaning, "For those who can work and refuse reasonable job offers repeatedly, full benefits will be suspended." The SPD is concerned that the current legal frameworks allow for limited enforcement of these measures, risking potential challenges in courts concerning their constitutionality.
Tax reforms are placed on the agenda, albeit vaguely. The coalition aims to relieve the middle class through income tax reforms and to raise commuting allowances. Yet, the exact financial resources available for such tax reforms remain unknown at this stage. The special fund for infrastructure should not become a means to finance electoral promises unwisely.
On March 13, 2025, the coalition talks formally began among the SPD, CSU, and CDU, with 16 working groups focusing on various aspects of governance, including pension reforms that are desperately needed due to rising concerns over pensioner poverty. Starting in July 2025, pensioners will expect an increase in their benefits, but this also comes amid fears of increasing poverty among the elderly.
Under the proposed reforms, pensioners will get a chance to earn additional income without heavy penalties. Starting now, individuals can earn up to 2,000 euros per month tax-free, significantly greater than the current threshold of 6,672 euros annually. With increased financial pressures from rising living costs, these reforms may help alleviate some of the burdens faced by retirees.
The coalition also aims to extend the so-called Mütterrente, or mother’s pension, which recognizes childbearing years for pension credit. Recently, this has faced scrutiny, as financial experts have questioned the efficiency of the Mütterrente, given its expense without clear mitigating factors for current pension challenges.
Finally, the inclusion of self-employed individuals in the statutory pension system is on the table. The draft discusses integrating all new self-employed workers into the statutory pension scheme, emphasizing that "Wir werden alle neuen Selbstständigen, die keinem obligatorischen Alterssicherungssystem zugeordnet sind, in die gesetzliche Rentenversicherung einbeziehen,” or “We will include all new self-employed individuals who are not assigned to an obligatory pension system into the statutory pension insurance.” This provides an opportunity for better security for the self-employed, who often face precarious futures without adequate pension plans.
As coalition negotiations progress, the future of pension reforms and social policies in Germany remains uncertain. Stakeholders will be eagerly watching how the parties reconcile their differences and address the ongoing challenges of migration, pensions, and social welfare reform. The potential legislations could greatly impact not just current beneficiaries, but also generations to come.
