The war in Ukraine, an unspeakable human tragedy, is forcing governments around Europe to reset international relations and find new partners to secure energy sources. The invasion has strongly tested the intent of the new German government to break with the previous administrations of Angela Merkel.

It took over 100 days in office to touch on pensions after news broke that the fiscal budget for 2022 cuts €500m financing to the Deutsche Rentenversicherung (DR), the institution managing the country’s first-pillar scheme. Finance minister Christian Lindner, of the Free Democratic Party (FDP), seems to have set in motion a process of reform, supported by his party, that would transform the pay-as-you go pillar into a partially capital-funded system, as promised in the electoral programme.

The cut in funding to the DR triggered a fierce debate in the parliament. Discussions on how to change all the three pillars of the pension system will probably continue. The perception is that the programme of the traffic-light coalition offers little clarity on how, or even if, the promises will become reality.

Financing the first pillar for equity investments has already turned out to be one of the sticking points among coalition partners. Any further public fund for third-pillar private pensions so far only exists on paper.

The plan to reinforce occupational pensions or give a new impulse to the social partner model dodges details on the way forward. The reform of the first pillar has dominated the public debate, and there are no signs that this will change in the near future, even though the Riester-Rente is an issue that the government will have to tackle.

Uncertainties in times of crisis like the one we are living in are likely to continue to shape political decisions, including on pensions, in years to come.

Luigi Serenelli, IPE DACH Correspondent