During a summit meeting held at the Berlin Chancellery on the evening of 28/29 August, the heads of the ruling coalition parties (CDU/CSU and SPD) secured a compromise on both pension payments and unemployment contributions. As a result, on 29 August the government adopted Employment Minister Hubertus Heil’s (SPD) draft reform of the legal pension insurance scheme. Termed the ‘Pensions Pact’, this reform that is set to come into force on 01 January 2019 will stabilize the level of legal pension payments at 48% of net income and that of old-age insurance contributions at 20% of gross income until 2025. In addition, the governing parties agreed to lower the unemployment contribution rate by more than expected and it will fall by 0.5% from 01 January 2019.
Controversy. The agreement was secured after intense and robust debate within the grand coalition. Conservatives had indicated their agreement in principle with the draft pension reform that was unveiled in July 2018 by Hubertus Heil (c.f. article No. 10762), but were seeking to link the reform to a greater than expected fall in the unemployment insurance contribution rate.
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