Of the many accusations flung at Germany's pension reform, the one that stuck fast as it sailed through the Bundestag yesterday was "verschlimmbessern", aGerman verb used when someone tries to improve something but ends up disimproving it.
That is the core problem, say critics, with the most controversial project to date of German chancellor Angela Merkel’s third term.
Two elements stand out in the pension reform. The first, a campaign promise made last year by the Social Democratic Party (SPD), allows people to retire early, at 63 years old, if they have 45 years of pension contributions behind them.
The second, promised by Dr Merkel's Christian Democratic Union (CDU), ends an anomaly whereby mothers who had children before 1992 received €26 less per child in their state pensions than those who gave birth after 1992.
Rather than compromise on their competing promises, the CDU-SPD grand coalition took office by agreeing to deliver on both. The CDU reform will benefit about 9.5 million mothers at a cost of about €7 billion annually; the SPD reform will cost €3 billion. The total collated cost for the two by 2030 is forecast at about €160 billion.
For Dr Merkel, her “mother’s pension” reform is a gesture of fairness to generations of women less able to combine career and family, who are thus dependent on their state pensions.
Solidarity SPD labour minister Andrea Nahles told the Bundestag her party's pension-at-63 plan was a gesture of solidarity to those, often in manual professions, who faced financial penalties for being physically unable to work to the regular retirement age.
“We are showing solidarity with those who can’t go on, those who started early and worked 45 years, so this is well-earned,” she said.
The plan passed with the grand coalition’s four-fifths Bundestag majority, with just nine No votes and two abstentions from the CDU ranks.
The vote followed a furious debate with the opposition Green and Left parties, who see the reforms as politically motivated short-term thinking at the expense of future generations. Germany has more pressing problems to finance than pension reform, opposition MPs argued, from underfunded childcare and postponed tax reform to transport infrastructure starved of investment for decades.
"You are doing exactly what you accuse southern European crisis countries of doing: financing clientelist politics on the never-never," saidthe Green Party's pension spokesman Markus Kurth.
Government politicians insist they are not rolling back decade-old social reforms, but a growing chorus inside and outside Germany believe just that.
Leading the protest is the ex-SPD leader Franz Müntefering. He raised Germany’s retirement age to 67 a decade ago and has called his party’s pension reform “bizarre”.
At first the pension reforms will be financed from the €32 billion state pension fund. When that surplus is exhausted before the end of the decade, Germany’s state pension agency has warned the reforms will “lead to higher contribution rates and lower level of pensions”.
Low birthrate
In Bundestag, hearings experts agreed with this forecast and recommended financing the reforms via tax income instead.
Even before yesterday’s reform, lower pensions are already a certainty in Germany thanks to a low birthrate and longer pension payments in a country where, by 2030, over-65s will account for 28 per cent of the population.
For the Organisation for Economic Co-operation and Development (OECD), Berlin’s pension reform sends the wrong signal to neighbours.
“Instead of long-term planning and to ready itself for an ageing population, sensible reforms are being rolled back,” said Ángel Gurría, OECD general secretary, in an interview with a German newspaper.
The pension plans are popular with German voters, with more than two-thirds in favour. But those who will have to pay for the pension reform, Germany’s younger generations, are furious.
Death-knell
"The cost for all of this falls on our shoulders through higher pension contributions," said political scientist Bettina Munimus, born in 1980.
“We have insecure, poorly paid jobs. We have to organise private pensions for ourselves and pay the state pensions of our parents.”
Germany's Süddeutsche Zeitung described yesterday's vote as a "sinfully expensive" death-knell for Angela Merkel's reform reputation.
“Merkel took office with great ambitions,” it wrote, “but that’s fallen off hugely.”
