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Pensions

Germans offered pre-poll pension 'stabilization'

Gradual repairs after decades of dwindling pensions have been promised by Germany's governing parties as they gear up for next year's election. Poorer placed eastern Germans are to get parity with westerners by 2025.

Andrea Nahles, Germany's social welfare and labor minister, presented a pre-election pensions package Friday, claiming it would lead to stabilization of pension payouts - and for some disadvantaged groups even gains.

Her announcement followed talks Thursday night between conservatives and Social Democrats (SPD) in the coalition led by Chancellor Angela Merkel, who last Sunday said she would run for a fourth term next September.

Parity for millions of pensioners in Germany's five eastern states - awaited since German reunification in 1990 - is to be reached by 2025 - but five years later than the parties had originally sought in their 2013 coalition government pact.

Priced at 3.7 billion euros ($3.9 billion) yearly by 2025, it was still unclear on Friday as to how this would be financed.

Nahles (pictured above) said there was "no mistaking that it would come out of tax revenues." - on top of the system's main source, salaries and employer contributions.

But Volker Kauder, who leads Merkel's Christian Democrats (CDU) and allied Christian Social Union (CSU) Bavarians in parliament, said Germany's "good economic situation" would ensure pension payouts without cuts.

Deutschland PK Volker Kauder (picture-alliance/dpa/P. Seeger)

Economy robust enough to fund pensions, says Kauder

Worker-employer contributions

Germany's pension system depends largely on joint contributions from employers and employees and is listed prominently on monthly pay sheets.

Germany's post-war pension method, which is funded by current generations of workers and their employers, faces erosive trends as the nation's population ages demographically - despite arrivals of refugees, many of whom are young and ready to work.

Gains, stabilization pledged

Friday's pre-Advent coalition offering also included pledges to stabilize pension payouts by 2045 and a legislative fixing of minimum pensions at 46 percent compared to what was previously paid as salaries.

Those injections were estimated to cost 4.2 billion euros by 2030 and 7.8 billion euros by 2045.

Gains were also promised for pensioners who enter retirement early because of ill health and those on sustenance rates because of lives spent working on low pay.

Nahles plans a "solidarity pension" for low-paid workers who have contributed to the statutory system for 35 years and set it 10 percent higher than Germany's basis social welfare payouts. From 2023, 45 working years will be required.

The minister also plans to open the statutory system to solo self-employed professionals not covered by supplementary retirement schemes in their sector.

CSU insists on parity for mothers

Leading Bavarian CSU parliamentarian Gerda Hasselfeldt said her party will continue to insist that pensions for mothers be increased.

Currently, pensioners who have raised two children get on average 66 euros less per month compared to childless female pensioners. Those who raised three children received 100 euros less.

"These figures prove that we must finally close this unjust gap," said Bavarian Social Welfare Minister Emilia Müller.

In a parallel move Friday, Germany's upper chamber, the Federal Council, representing the 16 regional states or Länder, adopted that so-called "flexi-pension" to allow workers nearing retirement to still be paid to work part-time.

They will be able to earn up to 6300 euros each year tax-free. Beyond that, earnings will be subject to a 40-percent deduction to cover social welfare contributions.

ipj/kl (AFP, dpa, epd)

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