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German lawmakers back early retirement plan

Friday - 5/23/2014, 4:16pm  ET

BERLIN (AP) -- German lawmakers on Friday approved a pension-reform package that included a much-criticized provision for some people to retire early on full pensions.

Germany is raising the retirement age to 67 from 65, but it plans to allow people who have paid pension contributions for 45 years to retire at 63 without a financial hit. The latter policy met opposition from business leaders but was included at the insistence of Chancellor Angela Merkel's center-left coalition partners.

The package also features higher pensions for mothers who stayed at home, advocated by Merkel's conservatives. Annual costs are expected to total up to 11 billion euros ($15 billion).

Lawmakers approved the plans Friday in a 460-64 vote, with 60 abstentions.

Some business leaders say Berlin is sending the wrong signal by pressing other European countries to raise retirement ages, yet making early retirement easier at home. Merkel and the German government have been forceful advocates of budget discipline as the key to overcoming problems with too much government debt in countries such as Greece, Ireland and Portugal. Those three countries had to be bailed out with loans from the other members in the Eurozone.

The government slogan for the package is "earned, not given."

But Ulrich Grillo, head of the BDI industry association, said that "we are preaching to our partner countries in Europe that they should raise the retirement age, and what are we doing? We are doing the opposite."


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