Growing internal resistance within the Christian Democratic Union (CDU) is emerging against the German government’s proposed pension reform package. The primary point of contention centers on the planned deactivation of the “sustainability factor” a mechanism designed to moderate annual pension increases when the ratio of retirees to contributors declines.
Nicole Hoffmeister-Kraut, Baden-Württemberg’s Minister of Economic Affairs, voiced concerns in an interview with the Frankfurter Allgemeine Zeitung (FAZ), stating that escalating ancillary wage costs in Germany are burdening businesses and employees and hindering job creation. She argued that reinstating the sustainability factor, or a similar demographic adjustment, is necessary to achieve a “fairer distribution of burdens between contributors and recipients” and explicitly called for its reintroduction by 2026.
The draft legislation, approved by the Federal Cabinet in early August, aims to suspend the factor for the years 2026 to 2031. Without legislative intervention, its automatic reactivation would occur in 2026.
Pascal Reddig, Chairman of the Young Conservatives within the CDU/CSU parliamentary group, has also expressed significant reservations. He pointed to the substantial portion of the federal budget – currently nearing a quarter – already allocated to the pension insurance system. Reddig warned that the planned package could cumulatively add an additional €200 billion by 2040.
Reddig emphasized that any additional spending of this magnitude would be justifiable only if accompanied by “far-reaching structural reforms” including the elimination of incentives for early retirement and the expedited reinstatement of the sustainability factor. He framed the decision as necessitating a broader assessment of the long-term financial implications for younger generations.
