German Chancellor Friedrich Merz announced on Tuesday that his government intends to push through a comprehensive reform of the pension system in the second half of the year. According to him, Germany can no longer afford to wait, as the pressure on the pension system is rapidly increasing with the retirement of large cohorts, wrote the Politico website.

“We must act quickly, because the problems we face cannot be postponed,” Merz told reporters in Berlin after an expert commission composed of academics and lawmakers presented 33 recommendations for changes to German pensions. The Chancellor also admitted that the country should have taken similar steps long ago. “In reality, we are already very late. We should have done all of this many years ago,” he said.

The proposals include mandatory, capital-funded pension savings inspired by the Swedish model. Another sensitive issue is the linking of the retirement age to average life expectancy. According to this mechanism, the retirement age would increase by approximately six months for each decade, starting in 2032. The commission's report states that the limit of 70 years would not be reached until 2092.

The pension reform is part of a broader package of long-delayed measures that are also intended to address taxes and long-term care insurance. Merz's conservative-led government is trying to demonstrate that, despite internal disputes, it can make decisions and govern. The pressure on the cabinet is also increasing due to the growing strength of the far-right Alternative for Germany party.

The reform has also been supported by Bärbel Bas, co-chair of the Social Democratic Party (SPD) and Minister of Labor. She emphasized that the commission's recommendations form a comprehensive package and that it is not possible to simply pick and choose the politically convenient parts. “I want to make it clear: I want to implement this package,” she said. She also pointed out that the government will need to gain the support of its own parliamentary factions, as the final decision will rest with the German Bundestag.

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