Germany’s ageing population continues to cause uncertainty about the future of the pension system. Here’s how the new government is planning to make ends meet.

The issues with Germany’s pensions pot are well documented. Thanks to the country’s ageing population, over the next 10-15 years, a huge number of people will go from being tax payers to pension recipients, creating a troubling imbalance between people paying into the system and people drawing money out.

It’s a problem that has been plaguing German politicians for years – and one that undoubtedly played a key role in coalition negotiations between the pro-business FDP and centre-left Green and SPD parties in November last year.

Now the so-called traffic light coalition is in government, these previously uneasy bedfellows are certain they have found the secret to solving the pensions issue. Like much of the trio’s coalition plans, it’s a multi-pronged solution that melds ideas from the left and the right.

Speaking to DPA on Thursday, Labour Minister Hubertus Heil (SPD) seemed confident that he could deliver the coalition’s promise of a stable pension rate without escalating costs to either employees or the state. “The decisive battle to stabilise pensions is taking place in the labour market,” he told reporters.

From 2025, when large swathes of the babyboomer generation will enter retirement, the imbalance won’t be solved with hiked-up contributions and state subsidies, the SPD politician warned.

“What is needed above all is to have as many people of working age in well-paid work as possible,” he explained.

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