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Germany – Parliament approves pension cuts

29 October 2012

Germany’s national parliament, the Bundestag, has approved a controversial €6.4 billion cut in state pension contributions last week benefitting both employers and employees, while also aiming to stimulate the economy.

From 1 January 2013 the pension contributions will be cut from 19.6% to 18.9%. This will benefit employers and employees equally, with each having their payments cut by €3.2 billion in a full year.

The reduction in pension contributions was opposed by the opposition parties which branded it as a pre-election stunt ahead of national elections next year.

The Bundestag also agreed to increase the amount employees can earn in state-subsidised “mini-jobs” for those with a low income. This will raise pay by €50 to €450, a step likely to cost the state €300 million a year.

Both measures have yet to pass the upper house, the Bundesrat, but the opposition has no power to stop the measures although it is able to delay its process. 

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