GERMAN COALITION AGREES PENSION REFORM WILL BE PASSED, SOURCES SAY

BERLIN (Reuters) -The leaders of the three parties in Germany's coalition government agreed on Tuesday that a planned pension reform package will be approved by the cabinet in May, government sources told Reuters.

The pension system has come under increasing pressure with a widening gap between salaries and pensions due to demographic changes, as millions in the "baby boomer" generation, born in the 1950s to the mid-1960s, retire.

The government plans to introduce an additional pension scheme investing in capital markets to ensure pensions remain linked to rising wages. The aim is to guarantee a pension level of at least 48% of an average wage until the end of the 2030s.

Employers have spoken out against the reform as being too expensive, requiring them to increase contributions to employees' pension pots.

Finance Minister Christian Lindner, of the pro-business Free Democratic Party (FDP), had abruptly blocked the package from reaching cabinet, arguing that the spending demands of the Social Democrats' labour ministry were excessive, a source said on Tuesday, confirming earlier media reports.

But a spokesperson for his ministry later said on a cabinet decision was planned for May. Two government sources said it would be approved.

Due to the high spending requests of the ministries for the 2025 budget, current plans must be internally discussed within the government, the spokesperson said.

The issue had threatened more wrangling in Germany's three-way coalition.

Lindner, Chancellor Olaf Scholz, of the Social Democratic Party, and Economy Minister Robert Habeck, from the Greens, met on Tuesday to negotiate on the budget, government sources earlier told Reuters.

Habeck had urged ministers to pull together.

"Everyone has to stop playing poker now and talk to each other very quickly," he told the ntv tv channel, warning colleagues against playing to their own base and the media.

(Reporting by Holger Hansen, Christian Kraemer, Maria Martinez, Andreas Rinke; Writing by Matthias Williams; Editing by Alison Williams)

2024-05-07T16:06:26Z dg43tfdfdgfd