Coalition Committee Seeks Compromise in Pension Dispute

Leaders from Germany's coalition government are meeting to address several contentious policy issues, with the ongoing disagreement over pension reforms taking center stage. The coalition committee, comprised of representatives from the CDU, CSU, and SPD, is working to resolve internal conflicts that threaten the passage of key legislative packages.

The central focus of the discussions is the proposed pension package, which aims to secure a 48 percent pension level until 2031. However, a group of younger members within the CDU/CSU parliamentary faction has opposed extending this higher pension level beyond the current legal framework, citing concerns about significant long-term financial burdens. Without their support, the coalition risks losing its parliamentary majority necessary for the pension reform's approval.

Despite the resistance, both the coalition leadership and the SPD have indicated that they are not open to making substantial changes to the existing draft. In an attempt to bridge the divide, the coalition has suggested the possibility of a follow-up pension reform package to address the concerns of dissenting members. Further negotiations are expected to continue with these lawmakers to reach a consensus and maintain coalition unity.

Another major agenda item is the planned ban on new combustion engine vehicles from 2035, in line with European Union climate targets. The EU has set a mandate that all new vehicles registered from 2035 onward must emit no carbon dioxide, effectively phasing out traditional combustion engines. While the SPD maintains its commitment to this timeline, the CSU has called for a reconsideration, citing the challenges faced by the automotive sector and the ongoing transition to electric vehicles. Proposals are being considered to allow greater flexibility for car manufacturers and potentially integrate both electric and combustion engine technologies as part of the transition.

The committee is also addressing the revision of the Building Energy Act, a legacy policy from the previous coalition, which has generated considerable debate. The current law requires new heating systems to operate with at least 65 percent renewable energy. Critics argue that this effectively mandates the use of heat pumps, while others warn that relaxing these requirements could undermine Germany's climate objectives. The coalition seeks to develop a more flexible and technology-neutral framework, but details remain under negotiation.

Additionally, health policy is on the agenda, with efforts focused on preventing further increases in health insurance premiums for 2026. A cost-saving package, designed to stabilize premiums, is currently stalled in the legislative process after being sent to a mediation committee by the Bundesrat. The delay has raised concerns about potential premium hikes, as health insurers prepare to set their contribution rates for the coming year. Disagreements persist over proposed spending controls for hospitals, and there are calls for more comprehensive savings across the health sector.

The outcomes of the coalition committee's deliberations are expected to shape the government's legislative agenda on pensions, climate action, housing, and healthcare. While immediate decisions are not anticipated, ongoing negotiations will continue as the coalition seeks to reconcile internal differences and deliver on its policy commitments.