Youth Union of CDU/CSU Raises Alarm Over Pension Reform's Future Costs

Youth Union Expresses Strong Opposition to Pension Package

The 'Junge Gruppe', the youth wing of the CDU/CSU parliamentary group in Germany, has publicly criticized the federal government's recently proposed pension package. The group's primary concern revolves around the projected billions in future costs that they believe the reform will incur, potentially burdening younger generations. This opposition highlights internal debate within the broader CDU/CSU, which is part of the current governing coalition.

Details of the Federal Government's Pension Package

The federal government's pension reform, often referred to as Pensions Package II, was approved on May 30, 2024. Its central aim is to stabilize the German pension system for the long term. Key components of the package include:

• A legal guarantee to maintain the pension level at 48% until at least June 30, 2040. This stability is intended to be funded, in part, through the federal budget.
• The introduction of a 'generation capital' fund, which will be managed by an independent public foundation. This fund is designed to invest globally, with returns (minus loan interest) supporting the pension system. It aims to generate approximately €10 billion in annual payouts by 2036.
• A new 'Frühstart-Rente' (Early Start Pension) program, set to begin on January 1, 2026. This initiative will provide €10 monthly for children aged 6 to 18 into an individual, capital-funded, privately organized savings scheme.
• The continuation of penalty-free retirement after 45 contribution years.
• A new mandatory pension obligation for all 'new self-employed' individuals, effective April 2025.
• Provisions allowing seniors to earn up to €2,000 tax-free per month alongside their pensions if they choose to work longer.
• An expansion of the 'mothers' pension' (Mütterrente), which will add three pension points for each child, funded by tax revenues.

Concerns Over Rising Costs and Future Burden

The 'Junge Gruppe's' criticism stems from the significant financial implications of these reforms. While the government aims to stabilize the pension level, projections indicate a substantial increase in financial demands on the system. In 2023, the total costs for old-age pensions in Germany amounted to €429 billion, representing approximately 10% of the gross domestic product. Forecasts suggest that expenditure on the statutory pension insurance system could increase by more than 75% by 2038.

Furthermore, the federal government anticipates that the pension contribution rate, currently at 18.6% of an employee's gross monthly salary, will rise to 20% by 2028 and further to 22.3% by 2035. These rising contribution rates, coupled with the increasing overall expenditure, form the core of the 'Junge Gruppe's' argument that the proposed package places an undue financial burden on current and future contributors, rather than adequately addressing the long-term sustainability challenges of the aging population.

Internal Debate Within the CDU/CSU

Despite the CDU/CSU being a partner in the coalition government that has agreed to these pension reforms, the 'Junge Gruppe's' vocal opposition highlights internal disagreements regarding the approach to pension financing. This faction emphasizes the need for reforms that ensure intergenerational equity and financial stability without disproportionately affecting younger workers. The debate underscores the complex challenge Germany faces in securing its pension system amidst demographic shifts and economic pressures.