Summary: the Grand Coalition under Chancellor Merkel raised the retirement age from 65 to 67 in 2007. This move was welcomed by the employers but fiercely opposed by the trade unions. Pension reform discourse afterwards shifted towards dealing with the fallout from retrenchment and attempts to improve the coverage of women and people with irregular employment histories.
In 2005, a second Grand Coalition of CDU/CSU and SPD took office under Chancellor Merkel. By that time, the raising of the retirement age was a missing element to pension reform that had been called for again and again, but always postponed or rejected by the government. It now became one of the main social policy issues in the 2010 coalition agreement. The trade unions were vocally in opposition, fearing it was nothing but a pension cut and would lead to higher unemployment among the young. There were also critical voices within the SPD, and as a result a special clause for people with long contribution histories was inserted that would still allow those who had started to work young to retire at 65 (Schroeder 2010b: 195). The exception for people with a 45-year contribution history only applied to 5% of women but 30% of men, and thus significantly reduced the savings potential (Schmidt 2010: 311).
Generally seen as the driving force behind the raising of the retirement age were not the conservative parties, even though they had called for the measure during Red-Green’s tenure. The central role was played by Labour and Social Policy Minister Franz Müntefering, who took on the matter as a way of complementing, completing the reforms of the previous government and the Agenda 2010 (Schmidt 2010: 311).
The reform was well-received by the employers but detested by the trade unions (Schroeder 2010b: 195), and they continued to campaign against it. The topic stayed on the agenda within the SPD as well, and the party struggled with having introduced a reform that proved to be very unpopular among its members. The resentment of the later retirement age dogged the party for so long that in 2013, when it came back into office as a junior partner in Germany’s third Grand Coalition, it insisted that a new retirement age of 63 for people with long working biographies should be re-introduced, and the reform in question was passed in 2014.
Unlike the Riester reform, raising the retirement age is a parametric reform that – speaking generally – does not mean a systemic shift. It did add to a general sense of continuously increasing pension cuts among the German population. The higher retirement age of 67 started being phased in in 2012, but as a policy issue it was not settled, and debate kept flickering up.
In 2009, the government changed again and Chancellor Merkel was now leading a Conservative-Liberal coalition. During this period, the problem of poverty in old age was
pulled into the public eye. The most important pension reform issue in this legislative period was the debates around a minimum pension for the long-term insured who had also contributed to private provisions, but still could only look forward to a pension level below or around general welfare benefits. This applied in particular to women. Minister for Labour and Social Policy von der Leyen pushed forward a proposal to introduce a minimum pension in which pension payments were topped up to be above that of means- tested social assistance if several criteria were met, such as a 35-year contribution record – where child-rearing credit counted as well – and private provision. As a conceptual discussion, the so-called Zuschussrente introduced a new approach to dealing with the problem of old age poverty, which is expected to become larger as the Red-Green reforms fully come into effect, and which is supposed to incentivise low-income earners to save privately, without having those private savings means-tested away (Arent 2012). But in terms of actual policy impact, the conditions were so tightly constricted and the predicted number of pensioners this applied to so limited that this cannot be counted as one of the major pension reforms.
The issue of the retirement age, on the other hand, remained salient and subject to ever more reform. Despite the 2007 reform taking effect from 2012, the issue was not settled in particular within the SPD. When the 2013 election resulted in the third Grand Coalition between CDU/CSU and SPD, the parties committed to further adjustments to the retirement age in the coalition agreement at the urging of the SPD. While the general retirement age of 67 remained standing, the exceptions for people with a long contribution history were made more generous: people who had paid pensions contributions for 45 years will now be allowed to retire at 63 with no deductions, and achieving a 45-year contribution history was made easier by recognising certain periods of unemployment as well as the raising of children (BMAS 2014).
The dominant topics in pension discourse in the 2010s have been the retirement age and the fall-out from the Red-Green pension reforms, though as the debate around the Zuschussrente shows, the systemic shift introduced with Riester has been generally accepted as a fact of life, and reform concerns now center around how to alleviate the unintended consequences and less desirable by-products of the systemic shift. The retirement age issue is a general retrenchment versus generosity item and does not call into question the underlying system. But the introduction of a minimum pension in response to the threat of old age poverty as a result of a declining replacement rate could be the next reform touching on the systemic principles of the German pension system, moving it even further away from the framework established in 1957.