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CDU/CSU sketches plans for pension reform

GERMANY -- The opposition parties that are expected to win Germany’s next general election have hinted that they would further reduce the state pension benefit if they form the next government.

Andreas Storm, the parliamentary spokesman on pensions of the conservative Christian Democratic Union/Christian Social Union (CDU/CSU) alliance, said that as part of a sweeping pension reform, a CDU/CSU-led government would review the current formula for calculating the state pension benefit.

“What we want to achieve is a more equitable sharing of the burden between contributors to the state pension scheme and its beneficiaries,” Storm told the Neue Presse newspaper in Hannover.

The review was the result of demographic changes in Germany, where a declining number of employees supported an increasing number of state pensioners, he said. The current ratio is three employees for every pensioner. Pension experts expect that from 2025 there will be only two employees for every one pensioner.

The review would mean a further reduction in the state pension benefit as the formula – partly based on wage increases – would have be adjusted for the demographic changes.

Those changes and low wage increases have already prompted the current centre-left government to freeze the state pension on July 1 – the second consecutive year that it has done so. Around 20 million state pensioners will be affected.

The Conservatives’ other pension reform plans include raising the retirement age to 67 or requiring 45 years of contributions to the state scheme before a pensioner can get the maximum benefit.

Even with these reforms, the CDU/CSU expects the maximum benefit to fall to 50% of a previous salary by 2035 from around 64% now.

Chancellor Gerhard Schröder, who leads a left-of-centre Social Democrat-Greens coalition, has called for a federal general election in September. The German system does not allow a chancellor to just call a new election but requires a government to lose a vote of no confidence in the Bundestag, or lower house of parliament. Such a vote will be held on 1 July.

Current polls suggest a decisive win by the CDU/CSU in a September election.

In a related development, Bert Rürup, the government’s chief adviser on pensions, said on public television that raising the retirement age would prevent further increases in the monthly contribution to the state pension scheme. That contribution, which is shared between employee and employer, is currently 19.5% of a gross salary.

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