After the election in Germany last year.....the 'grand coalition' was the result (CDU/CSU and SPD). Basically, the group was a bit far apart and was meant to be in a chess match of sorts when they ran various government functions.
The key item that came up around the end of 2013....from the SPD....was this idea of early retirement (age 63). Naturally, a bunch of Germans got all peppy and excited. Naturally, the economists sat there and said it'd bring up massive shortfalls on the way to finance it. Naturally, journalists refused to really jump into analyzing it because conclusions might disrupt the excitement. And naturally, the CDU folks questioned how it would work in the real world.
There were two gimmicks to the pension reform deal. First, most all women were still hostile over the pension reform from a decade ago....where certain mothers got an extra year of credit to their retirement, and certain mothers (of an older generation)....would not get the same credit. Most journalists expected the SPD (the originators of the concept).....to revisit it and correct it. It's been almost ten years now but we are at the point where they will agree on it.
The second gimmick is the age 63 situation. What most people felt was that the SPD had all the numbers and knew an inventive way to limit those who would fit into the profile. The massive costs anticipated.....may not have been the amount originally discussed, and there's some belief by economists now that it was a limited number of retirees who would have fallen into this situation of early retirement.
So this week....the CDU has come back to the table....like in a poker game, and doubled up. Basically, they've kinda shocked the SPD by agreeing but maneuvering toward a slightly different version. What will happen in July in Germany is a simple deal. You work forty-five years in the system and hit age 63....you retire. The years on Hartz IV (welfare)? They won't count.
You sit and figure the math. Basically, you had to start working by age seventeen, which means you were in a trade or a craft (roofer, plumber, carpenter, clerk, etc). Chancellor Merkel's chief direction was that physically-used workers were going to be ahead of the thinking-jobs (university graduates). If you figure the math....you graduate around age 22, and add forty-five years into it....you'd have to work to age 67. The brainy guys get nothing out of this change.
Unemployment status? This was added into the mix...something the SPD wanted to avoid. It would have cut the numbers drastically because most Germans will have at least one year of unemployment status in their life.
The general cost figured on both the mother's deal and this early retirement? Currently, between nine and eleven billion (a rough estimate). Why the uncertain nature? Well....no one is sure about folks willing to sign up for early retirement. Maybe it is nine out of ten. Maybe it's six out of ten. Maybe it's even four out of ten. You see.....taking early retirement....means less pay coming in the form of this pension check. Would a guy accept that? Maybe....maybe not.
Some frustration from the SPD leadership? I imagine that they felt that they owned this idea and the CDU would be totally against it. Instead....the CDU embraced it, and even took out some of the SPD filters....meaning more would get the deal than the SPD desired.
More taxation later? Well.....YEAH. I'm waiting for the journalists to ask how this will be paid into the pot. Higher deductions? More gas tax? Cuts on infrastructure? It's hard to say. With eighty million people.....Germany has a limited tax base, and it's fairly taxed already. So giving away an extra ten billion Euro.....remains a question mark. I suspect in ten years....this will come back to be a major problem and neither party will be able to clean up the anticipated future mess.
As for happiness over the deal? The general belief is that somewhere around 100,000 Germans will be taking advantage of the deal and likely meet the windows of opportunity. Everyone else? No. All of this to appease 100,000 potential voters? Yeah. That's the sad part of the story. There might be ten million people who get peppy, but once you filter in who can take it over the next twelve months.....it's not that big of a deal except for funding it.