Germany’s Public Pensions: In the Wrong Direction

AS THE country with the European Union’s fastest-ageing population, Germany has repeatedly tweaked its pension system to avert a slow-motion demographic disaster. The biggest reform came during Angela Merkel’s first term as chancellor. Then, as now, her centre-right Christian Democrats were yoked with the centre-left Social Democrats in a “grand coalition”. In 2007 the coalition decided that the normal retirement age should gradually rise from 65 to 67.Mrs Merkel has since preached similar demographic and economic sanity to most of her EU partners, criticising France in particular for straying off the right path. So it comes as something of a shock that Mrs Merkel, now in her third term and running another grand coalition, is reversing course. On the campaign trail for last September’s election, she promised to raise pensions for older mothers. The Social Democrats countered with promises to let certain workers retire at 63 instead of 65 (not to mention 67). As coalition partners, they will do both at once.It falls to Andrea Nahles, the labor minister and a Social Democrat who likes to wave the banner of “social justice”, to push the pension package through parliament by the summer so that it can take effect on July 1st. A previous reform let women with children born after 1992 treat three of their stay-at-home maternity years as if they had worked and paid full pension…

The Economist: Europe