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Ageing Germany lowers retirement age

AFP · 23 May 2014, 15:48

Published: 23 May 2014 15:48 GMT+02:00

The new rules will allow some workers to retire at the age of 63, while the norm of 67 is being progressively phased in for workers in Europe's top economy after a 2007 change.

Together with an improvement in pensions for mothers whose children were born before 1992, the reforms are set to cost Merkel's left-right "grand coalition" €60 billion up to 2020.

Merkel defended the reforms on Thursday as a "fair policy", while Social Democrat Labour Minister Andrea Nahles called it "just and necessary" during Friday's debate in the Bundestag lower house of parliament.

Alongside a national minimum wage and energy market reform, the new pensions plan is one of the biggest and thorniest projects tackled by Merkel's five-month-old government so far.

And wrangling over the nitty gritty between Merkel's conservatives and her Social Democrat (SPD) junior partners continued right up to the start of the week.

An agreement was reached on Tuesday between the parties and on Friday it won the backing of 460 MPs, while 64 voted "no" with 60 abstentions.

But criticism of the reform package still abounds. "Some winners, many losers," headlined Friday's Frankfurter Allgemeine Zeitung daily.

Germany's leading economic institutes argue the changes are a step in the wrong direction.

"I find that disastrous," Ulrich Grillo, head of the BDI Federation of German Industries said, a day before the parliamentary vote. "It's all the opposite of what we should be doing."

Critics, including from abroad, have also pointed to the paradox of Germany now lowering its retirement age after having pressed its partners in Europe during the debt and financial crisis not to permit the same.

Even former top Social Democrats, such as ex-chancellor Gerhard Schröder have condemned the reform.

A poll for ARD public TV Friday, however, showed that 73 percent of Germans backed retirement at 63 for some people, compared to 22 percent who said it was a move in the wrong direction.

Driven by the SPD for whom it was an election promise, the pension changes foresee the possibility of workers who have paid into the system for 45 years being able to retire from 63.

Story continues below…

Nahles this week made a concession to the conservatives by allowing the possibility for workers to agree with their employer to work beyond the legal retirement age.

The other flank of the reform was a conservative demand and benefits older mothers who gave up work to bring up their children and are now approaching retirement age with a low pension.

Faced with Germany's ageing population and having to both ensure an adequate labour force and finance its pensions, Merkel's earlier tie-up with the SPD agreed in 2007 on a gradual rise in the retirement age to 67.

SEE ALSO: Minister unveils €60 billion pension reforms

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