Growing discontent is brewing within Germany’s business sector over the pension package proposed by the governing SPD and CDU/CSU coalition. A coalition of 32 prominent industry associations is publicly demanding a halt to the legislative proposal, citing unsustainable financial burdens and a potential undermining of the nation’s long-term economic stability.
In a sharply worded letter addressed to the parliamentary group leaders of both governing parties, the associations characterize the planned reforms as “untenable” projecting additional costs of nearly €480 billion by 2050. These annual incremental expenses, leaping from €18.3 billion in 2031 to a projected €27 billion by 2050, represent a significant strain on the system, according to the signatories. Key organizations joining the chorus of disapproval include the Federation of Wholesale & Foreign Trade (BGA), Gesamtmetall (the German Engineering Federation), the German Construction Association (ZDB), the German Retail Federation (HDE), “Die Familienunternehmer” (Family Businesses Association), the Engineering Employers’ Association (VDMA), the Taxpayer’s Association and the Federation of Medium-Sized Businesses (BVMW).
The associations, representing approximately 17 million employees, accuse the government of pursuing a fundamentally flawed pension policy. They argue that the draft legislation unduly stretches the system’s solvency and fails to meet principles of intergenerational fairness, or financial viability. A particularly stinging criticism focuses on the newly established Pension Commission, tasked with comprehensively rethinking the system from 2031 onwards. The business groups contend that the proposed law effectively nullifies the Commission’s future authority before it even begins its deliberations, rendering its mandate largely symbolic.
Alarm bells are being rung regarding the potential for a systemic collapse of the German pension system. Businesses warn that employees face relentlessly increasing social security contributions or higher taxes, necessary to shore up the deepening shortfall within the pension insurance fund. This escalating cost pressure, they assert, will rapidly erode the competitiveness of German companies, accelerating the relocation of production and jobs to countries with lower labor costs. According to the letter, the currently contribution-financed pension system is on track to be “blown apart.
The associations are now calling for a complete reversal of the government’s pension policy. Suggestions for alternative strategies include the abolishment of the “Rente mit 63” (early retirement scheme at 63), a modest increase to the statutory retirement age and steeper penalty deductions for beneficiaries choosing early retirement. The public dispute underscores a growing rift between the governing coalition and key pillars of the German economy, with potentially far-reaching consequences for the country’s fiscal future and its international economic standing.