Grundrente: Merkel’s coalition reaches deal on Germany’s pension reform

The German coalition parties on Sunday reached a deal on pension reform, thus avoiding a political crisis which threatened to collapse the government of Chancellor Angela Merkel.

Grundrente: Merkel's coalition reaches deal on Germany's pension reform
Photo: DPA

After difficult talks, Merkel's conservative Christian Democrats (CDU) and its Bavarian partner the CSU agreed with the centre-left Social Democrats (SPD) on a deal on topping up the basic pension for low-income recipients who have worked all their lives.

Markus Söder, leader of the CSU in Bavaria, hailed the deal saying “there is no longer any reason to question the continuation of the coalition government”.

READ ALSO: How to maximize your German pension even if you retire elsewhere

On Twitter Söder added that the 'grand coalition' or GroKo had taken a “big step towards the future”.

“We have found a good and defendable solution for the CDU on this difficult subject,” CDU president Annegret Kramp-Karrenbauer told a joint news conference with the CSU and SPD leaders.

Interim SPD leader Malu Dreyer spoke of the compromise deal as “an important socio-political step”.

The two camps in the ruling coalition have been at loggerheads over the pensions issue in a country confronted by an ageing population.

A major political crisis had loomed among the government partners who also face internal party problems.

READ ALSO: From climate action to 'Soli tax': What you need to know about Germany's planned changes

What is the 'basic pension' (Grundrente)?

The basic pension is a supplement or top-up to the pension entitlements of low-income earners who have clocked up 35 years of contribution through work, child-raising or caring for relatives. It is intended to help those who currently receive a small pension.

The parties have agreed on implementing a “comprehensive income test” so that the new system really helps people in need – a previous sticking point for the coalition.

It will be introduced on January 1st 2021 and applies to those who have already retired and future pensioners.

The basic pension should reach between 1.2 and 1.5 million people. According to the SPD's Dreyer, women in particular will benefit.

Söder said the cost of the basic pension is likely to be between one and 1.5 billion euros.

READ ALSO: How does Germany's pension system measure up worldwide

The CSU's Markus Söder, the CDU's Annegret Kramp-Karrenbauer and the SPD's Malu Dreyer after they reached a deal on Sunday. Photo: DPA

New political chasm

Germany on Saturday marked 30 years since the fall of the Berlin Wall that ushered in the end of communism and national reunification.

But a new political chasm is opening up in Germany with the far-right gaining a strong foothold in the former communist states.

Last month Merkel's centre-right Christian Democrats were beaten into third place by the populist, far-right AfD in state elections in the ex-communist eastern state of Thuringia. Popular state premier Bodo Ramelow's far-left Die Linke party easily won the state race.

READ ALSO: What does the far-right AfD's success in Thuringia mean for Germany?

This was just one example of the squeeze being put on the traditional parties in or near the political centre.

The junior coalition partners, the centre-left SPD, are fighting for political survival and are expected to decide next month whether to remain in the government or change direction and trigger early elections.

On Sunday at least there was agreement in the coalition that the award of the new topped-up pension would be means-tested, a point  demanded by the CDU.

Since the coalition came into being in March 2018, Merkel has appeared less politically solid and observers have begun questioning her ability to lead after 14 years in office.

The 65-year-old has already said this will be her last term, due to end in the autumn of 2021.

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Living in Germany: Battles over Bürgergeld, rolling the ‘die’ and carnival lingo

From the push to reform long-term unemployment benefits to the lingo you need to know as Carnival season kicks off, we look at the highlights of life in Germany.

Living in Germany: Battles over Bürgergeld, rolling the 'die' and carnival lingo

Deadlock looms as debates over Bürgergeld heat up 

Following a vote in the Bundestag on Thursday, the government’s planned reforms to long-term unemployment benefits are one step closer to becoming reality. Replacing the controversial Hartz IV system, Bürgergeld (or Citizens’ Allowance) is intended to be a fair bit easier on claimants.

Not only will the monthly payment be raised from €449 to €502, but jobseekers will also be given a grace period of two years before checks are carried out on the size of their apartment or savings of up to €60,000. The system will also move away from sanctions with a so-called “trust period” of six months, during which benefits won’t be docked at all – except in very extreme circumstances. 

Speaking in parliament, Labour Minister Hubertus Heil (SPD) said the spirit of the new system was “solidarity, trust and encouragement” and praised the fact that Bürgergeld would help people get back into the job market with funding for training and education. But not everyone is happy about the changes. In particular, politicians from the opposition CDU/CSU parties have responded with outrage at the move away from sanctions.

CDU leader Friedrich Merz has even branded the system a step towards “unconditional Basic Income” and argued that nobody will be incentivised to return to work. 

The CDU and CSU are now threatening to block the Bürgergeld legislation when it’s put to a vote in the Bundesrat on Monday. With the conservatives controlling most of the federal states – and thus most of the seats in the upper house – things could get interesting. Be sure to keep an eye out for our coverage in the coming weeks to see how the saga unfolds. 

Tweet of the week

When you first start learning German, picking the right article to use can truly be a roll of the “die” – so we’re entirely on board with this slightly unconventional way to decide whether you’re in a “der”, “die”, or “das” situation. (Warning: this may not improve your German.) 

Where is this?

Photo: picture alliance/dpa | Boris Roessler

Residents of Frankfurt am Main and the surrounding area will no doubt recognise this as the charming town of Kronberg, which is nestled at the foot of the Taunus mountains.

This atmospheric scene was snapped on Friday morning, when a drop in temperatures saw Kronberg and surrounding forests shrouded in autumnal fog.

After a decidedly warm start to November, the mercury is expected to drop into single digits over the weekend. 

Did you know?

November 11th marked the start of carnival season in Germany. But did you know that there’s a whole set of lingo to go along with the tradition? And it all depends on where you are. First of all, the celebration isn’t called the same thing everywhere. In the Rhineland, it’s usually called Karneval, while people in Bavaria or Saxony tend to call it Fasching. Those in Hesse and Saarland usually call it Fastnacht. 

And depending on where you are, there are different things to shout. The ‘fools call’ you’ll hear in Cologne is “Alaaf!” If you move away from Cologne, you’ll hear “Helau!” This is the traditional cry in the carnival strongholds of Düsseldorf and Mainz, as well as in some other German cities.

In the Swabian-Alemannic language region in the southwest of the country, people yell “Narri-Narro”, which means “I’m a fool, you’re a fool”. In Saarland at the French border, they shout “Alleh hopp!”, which is said to originate from the French language. 

Lastly, if someone offers you a Fastnachtskrapfe, say yes because it’s a jelly-filled carnival donut. And if you’re offered a Bützchen? It’s your call, but know that it’s a little kiss given to strangers!