"Social policy milestone": coalition agrees in the Grundrenten dispute


For a long time, the Union and the SPD were fighting over the details of the basic pension. Now there is a compromise. Instead of the controversial means test, a "comprehensive income test" decides on the receipt of social benefits. It should reach 1.2 to 1.5 million people.
In the months-long dispute over the basic pension, the grand coalition has agreed on a concept with an income test instead of the controversial means test. "The knot is breaking through," said CDU leader Annegret Kramp-Karrenbauer. Acting SPD chairman Malu Dreyer spoke of a "social policy milestone". CSU leader Markus SOder said that there is now "no reason to discuss the coalition's continued existence". All three party leaders expressed optimism that they would be able to enforce the decision in their parties.

The "comprehensive income test" is a prerequisite for the basic pension, it says in the decision of the coalition. Here, an allowance of 1250 euros for singles and of 1950 euros for couples applies. The basic pension is to be introduced for existing and retirees on January 1, 2021. The concept stipulates that low-income earners with 35 years of contributions receive a supplement to the pension so that the salary is ten per cent above the basic pension. The Union wanted to limit the cost of the basic pension, the SPD does not take the circle of claimants too small.

At the same time, the contribution to unemployment insurance is to be reduced, from the current 2.5% of gross wages to 2.4% by the end of 2022. It has already been decided that this contribution should increase to 2.6%.

In addition to the basic pension, the Coalition also wants to introduce a free allowance for housing subsidies with a volume of around 80 million euros. This is to prevent that the improvement in the pension is not eaten by a reduction of the housing allowance. Both CDU leader Annegret Kramp-Karrenbauer and the acting SPD chairman Malu Dreyer were confident that this compromise was justifiable in the respective party and parliamentary committees.

Dreyer said the basic rent now agreed would reach 1.2 to 1.5 million people. Especially women would benefit: "Four out of five people will be women." The basic pension should be designed unbureaucratically, it says in the coalition decision. The reconciliation of income is "automated and citizen friendly" through an exchange of data between the pension insurance and the tax authorities.

Financing through taxes

CSU boss Markus SOder said the cost of the basic pension should lie between 1 and 1.5 billion euro. The compromise had "perfectly rounded off" the mid-term review of the Grand Coalition. The Bavarian Prime Minister also pointed out that the coalition had also agreed to a reduction in contributions to unemployment insurance. SOder rated the agreement as "a very good day" for the grand coalition. "The cow is off the ice," said the Bavarian Prime Minister. He was really relieved. "So, in my view, the Haloko's mid-term review is rounded up, and perfectly rounded, so from my point of view, there's no reason to discuss the continuity."

The basic pension as well as the planned allowances in the basic security and the housing allowance are to be financed by taxes and without increasing the contribution in the pension insurance. For this purpose, the federal subsidy to the general pension insurance is increased, it says in the decision of the leaders of the CDU, CSU and SPD. The financial transaction tax agreed in the coalition agreement should be introduced as an important contribution to the financing of the measures.

In addition, the coalition wants to promote more strongly the dissemination of additional employer-financed occupational pensions to low earners with a monthly income up to 2200 euros gross. For this purpose, the funding amount for occupational pensions will be doubled from a maximum of € 144 to € 288. In order to increase the attractiveness of employee share ownership in asset accumulation, the Union and the SPD also want to increase the tax-exempt amount in this area from EUR 360 to EUR 720.

CDU committees decide Monday

The coalition committee had also agreed to launch a participation fund for future technologies of up to 10 billion euros in the Kreditanstalt fur Wiederaufbau, especially in the areas of digitization and climate technologies. In addition to the basic pension, the Coalition wants to introduce an allowance for housing subsidies in the amount of about 80 million euros. This is to prevent that the improvement in the pension is not eaten by a reduction of the housing allowance.

It was found to be a "good and also for the CDU acceptable solution" and an important contribution in the fight against old age poverty, said Kramp-Karrenbauer. She will present the compromise on Monday to the CDU committees for decision. Vice Chancellor Olaf Scholz was also satisfied. "It's a good deal," said the SPD politician. "Germany gets a basic pension, socially and fairly." The leaders of the CDU, CSU and SPD had agreed on a compromise with Chancellor Angela Merkel after more than five hours of negotiations in the Chancellery.

Scholz: "Good agreement"

An agreement was also considered complicated because the coalition leaders would have to compromise in their parties. Both in the Union and in the SPD there are considerable internal reservations about possible variants of a basic pension. Vice Chancellor Olaf Scholz must represent the compromise at the SPD party conference in early December, if he should be elected there after the upcoming runoff election for the new party leader. Scholz, however, was satisfied. "It's a good deal," he said. The long work was worth it. "Germany gets a basic pension, socially and fairly."

The pension policy spokesman of the FDP parliamentary group, Johannes Vogel, called the compromise a "classic bad horse trade". The model is "at the expense of the younger ones". Green Party leader Katrin GOring-Eckardt demanded improvements in the newspapers of the Funke media group. Thus, the basic pension should be paid after 30 instead of 35 years of contribution and insurance periods.

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