Pension reform sparks crisis inside Merz’s CDU
A showdown over pension reform is pitting Merz against his own youth wing — with the coalition’s stability on the line.
Dear Reader,
Friedrich Merz is facing his third backbench rebellion in just over six months in power — and it could be the most serious yet.
After he failed to secure a majority for the supposedly routine formality of being elected chancellor in May and was forced into a humiliating retreat over a left-wing nominee for the Constitutional Court in July, he is now confronting a potentially destabilising standoff with his party’s youth wing over pension reform.
In August, his cabinet agreed on a law to reform the pension system, including a much-criticised paragraph that extends the so-called “mother’s pension” for women who took time out from work to raise their children. The Mütterrente is estimated to cost the state an additional several billion euros a year.
What has truly incensed young CDU lawmakers, however, is the government’s commitment to stabilise the current pension level until 2040. Germany’s pension system is straightforward: workers pay into funds, and that money flows directly to pensioners. In the 1960s, the ratio of workers to pensioners was six to one. Today, due to longer life expectancy and lower birth rates, it is just over two to one. The only ways to keep pensions stable are to raise contributions or divert more money from the federal budget.
Currently, around €110 billion is transferred from the federal budget each year to sustain the system. The Junge Union, the CDU’s youth wing, calculates that the government’s draft law will cost an additional €120 billion over the next 15 years — money they say their generation will be forced to shoulder through tax increases. Maintaining the pension level for so long, they argue, was never part of the coalition agreement and would have been unacceptable had it been.
The Junge Union is digging its heels in. They say they will vote against the reform unless the commitment is limited to 2031. And they have the numbers to make this more than a threat: 18 CDU lawmakers in the Bundestag belong to the Junge Union, while Merz commands a majority of just 12. If all of them rebel, the bill fails.
Over the weekend, Merz got a taste of how serious the youth wing is. When he addressed their annual conference, he was met with icy silence. Delegates who challenged him on pension policy received rapturous applause. Merz only aggravated the situation by lecturing his audience that “you can’t win elections” by demanding pension cuts.
Merz has almost no room to manoeuvre. The Social Democrats, his junior coalition partners, drafted the bill and insist it must pass unamended. “Nothing more will be changed in this law,” SPD leader Lars Klingbeil told party members on the same day Merz was being chastised by the Junge Union.
Labour Minister Bärbel Bas (SPD), who drafted the reform, went further, accusing the young CDU of lacking basic reading comprehension. The plan to stabilise pensions, she noted, was in the coalition agreement — and if some CDU lawmakers failed to understand that, “it wasn’t her problem.” The Junge Union was making “a fuss over nothing,” “jeopardising the coalition,” and “playing into the hands of extremists” — a thinly veiled swipe at the AfD.
What has the reaction been?
Few doubt that this confrontation could escalate into a full-blown crisis — one that could even topple the fledgling CDU–SPD coalition. Several newspapers reported over the weekend that the CDU leadership is already discreetly preparing for a possible minority government if talks collapse.
Merz, however, categorically ruled out governing without a coalition partner, calling such a scenario “out of the question.”
“After six months in office, Merz is already in crisis,” the liberal Süddeutsche Zeitung wrote, urging the chancellor to impose discipline on his party. “He must use all his authority to halt this irresponsible dancing on the edge of the precipice.” A minority government, the paper added, would be “absurd,” leaving Merz dependent on the AfD — “the very party he has identified as his main political opponent.”
Der Spiegel, normally cautious, took a different tone. From Covid lockdowns to military service, Germany’s youth have been forced to take on ever more burdens in recent years — the CDU youth should “remain steadfast” in fighting their corners, the magazine argued, and resist “transparent and hypocritical attempts to suppress legitimate resistance in the name of harmony.” The Junge Union should be prepared to provoke a crisis: “Germany has seen many such crises — and most of them for worse reasons.”
What comes next?
Originally, Merz hoped to pass his pension reform by the end of the year. One largely overlooked element is the “active pension,” offering tax breaks to those who work beyond retirement age. Merz had hoped to present this as the centrepiece of his “autumn of reforms.”
Instead, he is under growing pressure to postpone the vote until a compromise can be hammered out. Any delay will make him appear weak and ineffective — a perception likely to strengthen the AfD, which now consistently leads the CDU in most polls.
His other option is to push ahead with the vote and reassure the Junge Union that the issue will be revisited once a “pension commission” delivers its proposals next year. The youth wing would then need to decide whether to risk a rebellion that could plunge the country into crisis — or back down.
The German Review’s take
This dispute encapsulates the destructive dynamic at the heart of German politics. Many in the CDU are tired of governing with the SPD — and the feeling is mutual. After 13 of the past 20 years spent in grand coalitions, the perpetual compromise has hollowed out both parties, leaving them vulnerable to insurgent forces on the right and left.
The SPD is polling at just 14 percent, three points ahead of Die Linke. The CDU trails the AfD, 26 percent to 27. The longer both parties cling to their unhappy centrist marriage instead of turning to their ideological brethren on the left or right, the weaker their negotiating position will be when they inevitably must form coalitions with parties long considered unfit for national government.
News in Brief
🇧🇷 Does a day go by without Friedrich Merz offending someone? This time it is the entire country of Brazil. After returning from a climate summit in Belém, Merz said: “Last week, I asked some journalists who were with me: Who among you would like to stay here? No one raised their hand. They were all glad we returned to Germany… especially from the place where we had been.” In a sign of just how tactless the chancellor can be, those comments weren’t leaked from a private chat,— he made them during a public speech. Outrage followed swiftly. President Lula da Silva remarked that if Merz had visited a local bar, he would have realised that “Berlin doesn’t even offer him ten percent of the quality that Belém does.” Others accused him of racism and arrogance.
🇨🇳 Speaking of frayed relationships, Vice-Chancellor Lars Klingbeil travelled to Beijing this week to repair ties with China’s Communist leadership after Foreign Minister Johann Wadephul abruptly cancelled a trip last month, allegedly under pressure from Beijing to retract criticism of its Taiwan policy. A Chinese decision to block chip exports to Europe has also rattled the German car industry. Klingbeil says he has received assurances that China will ease supplies of chips and rare earth metals.
🐣 A compromise has been reached on the government’s plan to reintroduce a form of military service. The Defence Ministry says all young men will have to complete a questionnaire on their willingness to serve and undergo a military medical examination. German word of the week: Eierkontrollgriff — literally “egg inspection grip” — in which an army doctor fondles a potential recruit’s testicles. The ministry says this will remain standard practice because it allows doctors to detect issues such as early-stage cancer that could affect service eligibility. Young men have been expressing considerable anxiety online about the inspection.
Germany’s New Sonderweg
A century ago, German intellectuals claimed liberalism was too feeble to manage modernity, and only a disciplined state could hold chaos at bay. Today’s defenders of “defensive democracy” might make their case in the name of liberalism, but the reasoning sounds familiar.
Germany: A nation of mobile dead zones?
A month ago, Rachel found herself trudging through thick mud in Brandenburg, without shoes and without cell phone coverage. The absence of trainers was voluntary given that she was in a place called The Barefoot Park. But the lack of reception was not, and was made more noticeable after she briefly lost sight of her family in the park‘s sprawling premises. An article on Germany's notorious 'mobile dead zones.'
We’re reading:
Handpicked Berlin - tech, startup and career news for Berlin
Kaffee+Kuchen - musings on expat life in Germany
20% Berlin - local Berlin news in English
Share The German Review with friends to win a free subscription
Sincerely,
Jörg Luyken
There is a such a divergence in investing knowledge and financial literacy between the average Swiss young person and the average German one; I am curious how this gap evolved and why it persists.
The youth perspective on pension reform has been ignored for far too long; the role of intergenerational equity and fairness applies here. The maximum pension contributions as a percentage of salary should not rise further.
The government still has not introduced measures to incentivize private pensions and investing. Germany still has no tax-advantaged pension or retirement accounts, aside from Reister / Rurup, which are wholly inadequate and effectively annuities, particularly in an inflationary environment.