Germany’s finance minister is delaying pension reform because of the budget dispute, a source says

BERLIN (Reuters) – German Finance Minister Christian Lindner has abruptly prevented a pension reform package from reaching the cabinet, arguing that the Labor Ministry’s spending demands were excessive, a source said on Tuesday, confirming earlier media reports.

The government plans to introduce an additional pension scheme that will invest in the capital markets to ensure that pensions remain linked to rising wages. The pension reform was a joint effort between the Ministry of Finance and the Ministry of Labor.

The German pension system has come under increasing pressure as the gap between salaries and pensions continues to widen due to demographic changes. Millions of people from the ‘baby boom generation’, born in the 1950s to the mid-1960s, are retiring.

The issue is fueling further strife in Germany’s three-way governing coalition, with Lindner, the top cabinet member of the pro-business Free Democratic Party (FDP), blocking legislation he himself unveiled two months ago.

Lindner, Chancellor Olaf Scholz and Economy Minister Robert Habeck will meet on Tuesday afternoon to negotiate the budget, government sources told Reuters.

The Ministry of Finance, the Chancellery and the Ministry of Labor were not immediately available for comment.

Lindner was particularly dissatisfied with the Labor Department’s spending requirements for the 2025 budget, a source told Reuters.

On Monday he criticized five ministries for excessive spending wishes, without naming them.

The aim of the pension reform is to guarantee a pension level of at least 48% of the average wage until the end of 2030, so that retirees can maintain their standard of living even after retirement.

Employers have spoken out against the reform as too expensive, forcing them to increase contributions to workers’ pension pots.

Habeck had urged ministers on Tuesday to work together.

“Everyone has to stop playing poker now and talk to each other very quickly,” he told TV channel NTV, warning his colleagues against playing on their own base and in the media.

(Reporting by Holger Hansen, Christian Kraemer, Maria Martinez, Andreas Rinke; Writing by Matthias Williams; Editing by Alison Williams)