Latest news with #Reiche
DW
01-08-2025
- Business
- DW
Will Germany raise retirement age beyond 67? – DW – 08/01/2025
Germany's old-age pension system faces collapse under the weight of an aging population. The country's new Economy Minister Katherina Reiche wants Germans to work longer to make up for it. For German Economy Minister Katherina Reiche, there's a simple way to fix Germany's pension system: "We need to work more and longer," she flatly told the newspaper in late July, instantly triggering a new debate along familiar lines. Reiche argued that the pledges her government had made in the coalition contract earlier this year were just not going to be enough. Germany's aging population has long been recognized as a problem. The population's median age — 46.7 — is the eighth-highest in the world and the third-highest among major economies, after Japan and Italy. By 2040, fully a quarter of the population is expected to be 67 or older. This year, birth rate fell to its lowest point in 20 years. This has had a marked effect: In the early 1960s, there were still six actively insured workers for every pensioner — that ratio is now 2 to 1 and sinking, and in 2025, two-thirds of the Labor Ministry's budget will go into the pension system: €121 billion ($140 billion). "It cannot be sustainable in the long term for us to work only two-thirds of our adult lives and spend one-third in retirement," said Reiche. "Unfortunately, too many people have been refusing to accept the demographic reality for too long." Reiche's statements triggered a quick backlash from her center-left Cabinet colleagues. Lars Klingbeil, finance minister and leader of the Social Democratic Party (SPD), which traditionally sees itself catering to a working-class electorate, described Reiche's statement as a "slap in the face" for many workers. "It's easy to say that when you're sitting in your comfortable chair in Berlin," Klingbeil told news outlet ntv. "But you should go out and talk to the people in the country who are working as roofers, who are working as nurses, who are working as teachers and are really wearing themselves out and who are already struggling to make it to 67." Trade unions, meanwhile, said Reiche's plan was simply a new way to cut pensions. Many workers will be unable to work to a higher age for health reasons, forcing them to retire early, and accept deductions that permanently reduce their pensions. The contract agreed by Germany's two governing parties — Reiche's conservative Christian Democratic Union (CDU) and the SPD — promised that Germany's current retirement age would not be raised. Instead, the contract pledged, "We want more flexibility in the transition from job to pension." In practice, "flexibility" means offering incentives to people who work beyond the legal retirement age. This would include measures like the so-called "Aktivrente" ("active pension"), by which any income of up to €2,000 per month is tax-free for those above the legal retirement age. Jan Scharpenberg, pensions expert at the financial advice company Finanztip, is convinced that the German pension system urgently needs to be reformed, but that the debate around it has become tedious. "The length of a working life is just one of the levers that can be adjusted to reform the German pension system in order to deal with the demographic transformation," he told DW. "And if I'm being really honest, I think it's a bit exhausting how for years and decades the same pro- and con arguments are being made, but no actual reform is put in place." While he agrees that raising the legal retirement age may become necessary, that doesn't negate the argument that it would, in practical terms, mean pension cuts for some people. "Those two things can be true at the same time, but that shouldn't prevent a pension reform," he said. "A reform of the system will only work if you combine and pull several levers." The retirement age system in Germany is dauntingly complicated. At the moment, the legal retirement age in Germany is 65, though it is scheduled to rise to 67 by 2031. But the age is staggered depending on the individual's year of birth, and how long they have paid into the system. And there are exceptions: People who are disabled or have paid into the system for 45 years, for example, can retire earlier. A contribution of 18.6% of an employee's gross monthly salary goes into the state retirement fund, with the employee and the employer each paying half. The government expects this contribution rate to rise to 22.3% by 2035, where it is supposed to level out until 2045. Johannes Geyer, public economics researcher at the German Institute for Economic Research (DIW), pointed out that the reason why the retirement age issue is so contentious is because it affects workers differently. "There are lot of people who can't imagine working beyond the age of 67," he said. "But those in perhaps better paid jobs can do that." To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video But many experts say the narrow focus on the retirement age is unhelpful, as there are many different ways of increasing contributions to the pension system. One measure, for example, would be to provide better child care facilities, so that more single parents are able to work full-time and therefore pay higher pension contributions. Another solution might be to make migrating to Germany to work easier and more attractive. There are also proposals to increase the number of people paying into the public system by including the self-employed and civil servants, a proposal made recently by Labor Minister Bärbel Bas from the SPD. Meanwhile, on the expense side of the ledger, some more painful measures might be put in place to balance the books. Apart from raising the retirement age, that might mean extending the "waiting time" (the number of years one must pay into the system before one can begin to draw a pension), or reducing the rate at which pensions increase every year. The pension increase is calculated based on the development of gross wages and salaries in Germany and is 3.74% for 2025. In the coalition agreement, the SPD was able to secure the pension level at 48% of the standard pension to the average income (before taxes) until 2031. Critics have labeled this as untenable. According to Scharpenberg, a mix of measures needs to be implemented. But instead, he said, the perennial political debate revolves around doing one measure or another, as if it were impossible to combine them. The German pension system is structured very differently to other European countries. In Denmark, for example, the retirement age is linked to the country's life expectancy, so that it rises automatically as people live longer. And in Sweden, an individual's contributions are invested in various financial markets and then the profits are paid out when that person reaches old age. "That helps to diversify the risk," said Geyer. "They're not so dependent on the aging of their own population." In the German system, on the other hand, contributions from workers are put into a single pot, which is used to finance current pensions. Geyer argues that, unlike other European countries, Germany has failed to develop private insurance options to complement state pensions so that they help the whole population, rather than just the rich. "Other countries have done that significantly better," he said. "The UK, the Netherlands, Denmark, Sweden — they all have systems of obligatory insurance with relatively low costs and good profits. That's missing here."While you're here: Every Tuesday, DW editors round up what is happening in German politics and society. You can sign up here for the weekly email newsletter Berlin Briefing.
DW
23-07-2025
- Business
- DW
Germany moves to fast-track weapons purchases – DW – 07/23/2025
Berlin wants to speed up the rate at which it can buy weapons, bypassing lengthy tender processes for military contracts. Critics warn that it could open a path to the unfair awarding of contracts and corrupt practices. Germany's cabinet has approved a draft law to accelerate arms procurement for the military, Defense Minister Boris Pistorius said Wednesday, calling it a "quantum leap" for national security. The bill is designed to cut red tape and allow the Bundeswehr to buy weapons and equipment faster and with fewer bureaucratic hurdles. The proposed legislation cites Russia as "the most immediate threat to peace and security" and stresses Germany's need to boost NATO defense capacity. Officials say there is no indication Moscow is willing to end the war in Ukraine and that Russia's war goals "go beyond Ukraine." "We want to speed up procurement to make Germany safer," Pistorius told a press conference in Berlin. "If the tank is full but the fuel line is clogged, then it won't help us much." Economy Minister Katherina Reiche said the changes would give arms producers planning certainty and help scale production. "We need more weapons and we need them faster," she said. To achieve defense capability, Germany is taking on significant new debt, Reiche said. "We must invest this money in new technologies for air defense, satellite capabilities, drones, autonomous systems, and AI capabilities." The draft law proposes higher so-called value limits so that the Bundeswehr can award contracts directly more quickly, rather then putting them out to tender. Currently, this value limit is generally €15,000 ($17,600), but it should be increased to €50,000, Reiche said. For contracts that strengthen defense capabilities, the new value limit would be €443,000 while the construction threshold would rise to €1 million. Procurement would also be accelerated for barracks construction and repair. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The federal government also wants to facilitate cooperation with start-ups developing innovative defense technology. These young companies could receive advance payments for contracts "on a much larger scale" in the future, Pistorius said. This is because they often lack the financial means "to be able to ramp up production quickly." To support the increased military spending, Germany has loosened its constitutional debt limits. NATO recently adopted a target for members to spend 5%, including related infrastructure, of GDP on defense by 2035 — a Cold War-level figure. The Green Party criticized the plans as inadequate with "far too little" being done. Green Party parliamentary group deputy Agnieszka Brugger told the newspaper it would be necessary to increase production capacities and solve supply chain problems. An example of how this could be achieved, she said, was through more joint European procurement projects. The Left Party accused the coalition of giving "priority" to "war preparation" with the law and allowing it to override contract standards. Left Party lawmaker Pascal Meiser said the bill opened up a doorway to wasteful spending and corruption. "The federal government's plans to accelerate awarding contracts threaten to become a gateway for the inefficient use of taxpayer money and crony capitalism," he said. The German Confederation of Skilled Crafts also urged safeguards to ensure fair competition and participation for small regional businesses.
Reuters
01-07-2025
- Business
- Reuters
Germany lowers gas security alert level as supply bottlenecks ease
BERLIN, July 1 (Reuters) - The German government has lowered the gas supply security level to early warning grade from alarm level, Economy Minister Katherina Reiche said on Tuesday. Germany's gas supply is secure and the conditions for the alert level according to its emergency plan no longer exist, Reiche said, adding that given the stable situation, it was not necessary for the government to refill the country's gas storage facilities through its trading hub.
Time of India
28-06-2025
- Politics
- Time of India
German government shows cracks over nuclear energy
Representative Image (AI-generated) It was only a relatively petty dispute over the organization of an EU event in Brussels. And yet, revealed how differently Economy Minister Katherina Reiche — of the conservative Christian Democratic Union (CDU) — and Environment Minister Carsten Schneider — of the center-left Social Democratic Party (SPD) — think about renewable energy, climate protection and nuclear power. In mid-June, Reiche was looking for a way to spend the evening in Brussels after a long meeting with her EU counterparts. There were two options: a meeting with representatives from countries that want to continue to expand renewable energies, and a meeting with pro-nuclear states. Twelve of the 27 EU states operate nuclear power plants, with France having the highest proportion — 55 reactors. Reiche ultimately attended the meeting of these countries, even though the government of former Chancellor Angela Merkel moved to phase out nuclear energy after the 2011 nuclear disaster in Fukushima, Japan. Germany's last power plant went off the grid in spring 2023. Renewables or nuclear power? The fact that Reiche nevertheless chose to attend the meeting with the nuclear countries angered her SPD colleague. Schneider is officially responsible for nuclear safety in Germany as the environment minister, including issues relating to the interim and final storage of nuclear waste. "We have decided to phase out nuclear power. This has also been accepted by society," Schneider said. Officially, Germany is focusing on transitioning to renewable energies, and a large proportion of its energy is now generated from wind or solar power. "There are no further commitments [to the nuclear industry], nor will there be any," said Schneider. France, Germany backing all forms of energy: The disagreement between the Economy Ministry and the Environment Ministry on nuclear energy issues was already apparent. At the end of May, Reiche said in Brussels that she was "open to all technologies" when it came to energy production. The specific trigger was a joint paper by the governments in Paris and Berlin, which stated that the energy policy in both countries would be implemented "based on climate neutrality, competitiveness and sovereignty." In other words, according to the wishes of German Chancellor Friedrich Merz and French President Emmanuel Macron, all forms of energy are to be promoted in the EU as long as they are low-emission. In France, this applies above all to the many nuclear power plants. In fact, nuclear power plants emit little or no greenhouse gases during operation and are therefore considered climate-friendly by their proponents. The dangers of the technology lie in controlling the nuclear chain reaction and the nuclear waste it produces, which remains radioactive for many thousands of years. According to the EU treaties, each member state has the right to choose its own energy mix. Major plans for new gas-fired power plants: There is also likely to be more disagreement between Reiche and Schneider on the issue of new gas-fired power plants. Shortly after taking office, the CDU minister announced plans to build 20 new gas-fired power plants. The previous government had also announced new construction to compensate for the often-fluctuating supplies from solar and wind power — but not in such large numbers. This is also a cause for concern for Schneider, who is responsible for meeting Germany's climate targets. In mid-May, the German government's expert council on climate issues warned that the goal of becoming climate-neutral by 2045 must be backed up by a truly concrete plan from the government. A warning from climate experts: The economy and environment ministries have often clashed on issues of climate protection and energy policy. At the moment, the government's climate goals are being helped by the rather weak economy and the resulting lower production, especially in industry, according to the council. A member of the panel, Marc Oliver Bettzüge, director of the Institute of Energy Economics at the University of Cologne, told the newsmagazine Der Spiegel: "At this point in time, it is not clear how the federal government intends to achieve the goal of climate neutrality by 2045." Building new gas-fired power plants is likely to make this plan even more difficult. Although gas-fired power plants emit less greenhouse gases than coal-fired one
DW
28-06-2025
- Politics
- DW
German government shows cracks over nuclear energy – DW – 06/28/2025
The economy minister attended a meeting of EU states using nuclear energy, even though Germany shut down its last reactor in 2023. The environment minister was quick to insist Germany will stick to its nuclear phaseout. It was only a relatively petty dispute over the organization of an EU event in Brussels. And yet, revealed how differently Economy Minister Katherina Reiche — of the conservative Christian Democratic Union (CDU) — and Environment Minister Carsten Schneider — of the center-left Social Democratic Party (SPD) — think about renewable energy, climate protection and nuclear power. In mid-June, Reiche was looking for a way to spend the evening in Brussels after a long meeting with her EU counterparts. There were two options: a meeting with representatives from countries that want to continue to expand renewable energies, and a meeting with pro-nuclear states. Twelve of the 27 EU states operate nuclear power plants, with France having the highest proportion — 55 reactors. Reiche ultimately attended the meeting of these countries, even though the government of former Chancellor Angela Merkel moved to phase out nuclear energy after the 2011 nuclear disaster in Fukushima, Japan. Germany's last power plant went off the grid in spring 2023. The fact that Reiche nevertheless chose to attend the meeting with the nuclear countries angered her SPD colleague. Schneider is officially responsible for nuclear safety in Germany as the environment minister, including issues relating to the interim and final storage of nuclear waste. "We have decided to phase out nuclear power. This has also been accepted by society," Schneider said. Officially, Germany is focusing on transitioning to renewable energies, and a large proportion of its energy is now generated from wind or solar power. "There are no further commitments [to the nuclear industry], nor will there be any," said Schneider. The disagreement between the Economy Ministry and the Environment Ministry on nuclear energy issues was already apparent. At the end of May, Reiche said in Brussels that she was "open to all technologies" when it came to energy production. The specific trigger was a joint paper by the governments in Paris and Berlin, which stated that the energy policy in both countries would be implemented "based on climate neutrality, competitiveness and sovereignty." In other words, according to the wishes of German Chancellor Friedrich Merz and French President Emmanuel Macron, all forms of energy are to be promoted in the EU as long as they are low-emission. In France, this applies above all to the many nuclear power plants. In fact, nuclear power plants emit little or no greenhouse gases during operation and are therefore considered climate-friendly by their proponents. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The dangers of the technology lie in controlling the nuclear chain reaction and the nuclear waste it produces, which remains radioactive for many thousands of years. According to the EU treaties, each member state has the right to choose its own energy mix. There is also likely to be more disagreement between Reiche and Schneider on the issue of new gas-fired power plants. Shortly after taking office, the CDU minister announced plans to build 20 new gas-fired power plants. The previous government had also announced new construction to compensate for the often-fluctuating supplies from solar and wind power — but not in such large numbers. This is also a cause for concern for Schneider, who is responsible for meeting Germany's climate targets. In mid-May, the German government's expert council on climate issues warned that the goal of becoming climate-neutral by 2045 must be backed up by a truly concrete plan from the government. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The economy and environment ministries have often clashed on issues of climate protection and energy policy. At the moment, the government's climate goals are being helped by the rather weak economy and the resulting lower production, especially in industry, according to the council. A member of the panel, Marc Oliver Bettzüge, director of the Institute of Energy Economics at the University of Cologne, told the newsmagazine : "At this point in time, it is not clear how the federal government intends to achieve the goal of climate neutrality by 2045." Building new gas-fired power plants is likely to make this plan even more difficult. Although gas-fired power plants emit less greenhouse gases than coal-fired ones, 20 new plants would jeopardize the climate you're here: Every Tuesday, DW editors round up what is happening in German politics and society. You can sign up here for the weekly email newsletter, Berlin Briefing.
