Could the German government collapse over pensions dispute?

 

Could the German government collapse over pensions dispute?

Jens Thurau

11/18/2025 November 18, 2025

https://www.dw.com/en/could-the-german-government-collapse-over-pensions-dispute/a-74791858

 

Young conservative politicians are rebelling against Chancellor Merz over pension reform. The row has been framed as a question of "intergenerational justice" as Germany struggles to pay for its aging population.

 

The German government, which has been in office since May and consists of center-right Christian Democrats and Christian Social Union (CDU/CSU) and center-left Social Democrats (SPD), promised the German population that it would refrain from the kind of infighting that made the previous government under former Chancellor Olaf Scholz (SPD) the most unpopular government ever.

 

In some respects, it has succeeded in doing so. There have been heated debates within the government on issues ranging from immigration policy to military service, but solutions were ultimately found.

 

However, the dispute over the old age pension insurance system has emerged as a serious test for the coalition under Chancellor Friedrich Merz (CDU).

 

Prominent government representatives are still trying to reassure the public. In an interview with DW on Monday, Federal Interior Minister Alexander Dobrindt (CSU) said: "The fact that there are discussions and even broad debates about one or two projects is normal in politics, in my opinion. It always depends on whether you are on the way to a solution or just taking a blockade stance. And I see that we are moving towards a solution."

 

Pensions have been a constant topic of debate in German politics for decades. People are living longer, which means they are drawing money from the state pension fund for longer and longer periods of time after retiring. And their numbers are growing as society ages.

 

The majority of Germans, excluding civil servants and the self-employed, pay into the state retirement fund. Both they and their employers pay 9.3% of gross income, for a total of 18.6%. The specific amount of an individual's pension is determined by factors like their contributions over their working life, as tracked by pension points, which are then converted into a monthly payment.

 

But this calculation no longer works because there are fewer and fewer contributors paying into the system to support an ever-growing number of pensioners. As a result, the pension system is being supported by billions of euros from the federal budget. In 2026, this will amount to €128 billion ($148 bn), or just under a quarter of the total budget of around €524 billion.

 

The pensions issue is being framed by some as one of "intergenerational justice." Should young people in Germany accept that the current generation of pensioners is comparatively well provided for and that future generations will pay for this if the state goes into debt?

 

In their coalition agreement, conservatives and social democrats agreed to stabilize until 2031 the statutory pension level at the current level of 48% of the income of an average earner.

 

In the past few weeks, the government came up with a legislative proposal for the pension system and plans to get it passed by the parliament in December.

 

The draft includes a couple of the conservative projects: A scheme to encourage pensioners to continue working, termed "active pension," and the CSU's pet project to raise pensions for older parents — colloquially known as "mother's pension." But mainly at the urging of the SPD, there is also a provision propping up pension levels beyond 2031.

 

The CDU/CSU's youth organization, the Junge Union (Young Union), argues that this will lead to extra expenditure of around €120,000. At their meeting at the weekend, delegates unanimously decided to call on the young conservative lawmakers in the Bundestag not to approve the pension package in its current form.

 

Chancellor Merz was for many years a role model for members of the Junge Union who considered him to be a hands-on reformer with a clear conservative profile. After the youth group rejected the pension plans, Merz appeared as a guest speaker in Rust. Visibly agitated, he called out to the assembled delegates: "Please participate constructively in this debate, but not by simply saying what won't work."

 

Merz's governing coalition has a slim majority of only 12 votes. So the 18 under-35-year-old lawmakers could scupper the pension compromise.

 

The Social Democrats are digging in their heels. SPD chairman, Finance Minister and Vice Chancellor Lars Klingbeil announced that his party was not prepared to consider any changes. "Let me be very clear: Nothing more will be changed in this law," Klingbeil said at a regional party conference on Sunday.

 

But the young conservative lawmakers have received support from some high-ranking CDU politicians. Economy Minister Katherina Reiche (CDU) has warned against an additional burden on already high non-wage labor costs. To smooth the waters, Education Minister Karin Prien (CDU) proposed postponing the vote.

 

Just how nervous the government is at the moment — and how this is perceived by the media — became clear when Friedrich Merz appeared at the "economic summit" of the Süddeutsche newspaper on Monday. There, he countered rumors that the dispute over pensions could lead to the collapse of his government and brushed aside rumors that he would consider working alone with his CDU/CSU union in a minority government.

 

"In my view, it is out of the question to do such a thing," the chancellor said before asking, "Does anyone seriously believe that we could work in this German Bundestag with changing majorities and still do reasonable legislative work?"

 

The chancellor now wants to try to persuade the SPD to make a small concession in an "accompanying text" to the draft legislation. It should contain a commitment to discussing pension developments after 2031 again. However, it remains to be seen whether the Social Democrats and the young CDU/CSU members of parliament will agree to this.

 

SPD Labor Minister Bärbel Bas said at the same economic summit that if the pension package is not passed "there will be great unrest in my party and my parliamentary group." She does not see the SPD as responsible. "Those who are currently jeopardizing the coalition are sitting in the CDU/CSU," Bas said.

 

This article was originally written in German.