Explaining The Current German Pension Reform Package Mess

 To lay this German Pension Reform Package out in simple form.

It's designed as a pay-as-you-go model....but saddled with a aging population...with high numbers currently retiring....folks getting older.....and the worker-to-retiree ratio has plummeted from 6:1 (1950s/1960s)....to today's 2:1.

This year....roughly two-thirds of the Labor Ministry's budget (in the 120 billion Euro range)...will fund pensions. 

There's a reform package (called "Pensions Package II" or the "Pensions Stabilization and Generation Capital Act,") which aims to stabilize the program.  

All of this  design....is supposed to supplement the system without raising taxes (directly).

Here's the thing....it's supposed to come up for a vote in December in the Bundestag.  There's also a incentive built in....tax-free earnings up to €2,000/month for working retirees and mandatory pensions for new self-employed workers from April 2025. You get this if you work  PAST your retirement. Polling-wise....no one says if this is popular or not.

So here's the problem....a internal fight within the youth element of the CDU-CSU....claims of intergenerational inequity. Young conservatives, particularly 18 MPs from the Junge Union (youth wing of CDU/CSU), are threatening to defect and block the bill. 

Key chatter....some folks say there's a 120 billion Euro 'hole'. Maybe that's legit....maybe not.  If passed....this 'hole' business will be a year or so away.

The fragility problem? Merz's coalition holds a razor-thin 12-seat majority in the 630-seat Bundestag.

If this fails....I'd start to suggest a collapse within 12 months....of the SPD and CDU-CSU coalition. 

It's an odd mess, which has lingered there for ten-odd years (Merkel could have worked it, but didn't really have the guts).  The youth element and their point?   Someone has to pay....in the end.