Germany: Grand Coalition adopts first bill on pension reform, introducing retirement at 63 for employees who paid contributions for 45 years

Gathered at a cabinet meeting on January 29, Angela Merkel’s administration agreed to its first bill – highly controversial – on the pension reform.  Developed by the new Minister for Employment, Andreas Nahles (SPD), the future law doesn’t officially question the gradual increase in retirement age to 67 but introduces a big exception.  Starting on July 1, 2014, employees who paid contributions for 45 years (including short periods of unemployment) will be entitled to full pension at 63 instead of 65 today.  Besides, mothers who had children before 1992 will see their pensions rise.  These measures should cost contributors and taxpayers nearly €160 billion by 2030.  Retirement at 63 sparked off a wave of protest among employers and economists, so Nahles announced that additional measures would be adopted during the legislative process in order to avoid another wave of early retirements.  The bill, which will now be sent to the Bundestag and Bundesrat, is set to come into force on July 1, 2014.