German finance minister stalls pension reform in budget wrangling, source says

German Finance Minister Christian Lindner has abruptly blocked a pension reform package from reaching cabinet, arguing that the spending demands of the labour ministry were excessive, a source said on Tuesday, confirming earlier media reports.

German Finance Minister Christian Lindner has abruptly blocked a pension reform package from reaching cabinet, arguing that the spending demands of the labour ministry were excessive, a source said on Tuesday, confirming earlier media reports. The government has planned to introduce an additional pension scheme investing in capital markets to ensure pensions remain linked to rising wages. The pension reform was a joint effort by the finance ministry and the labour ministry.

Germany's pension system has come under increasing pressure with a widening gap between salaries and pensions due to demographic changes, as millions in the "baby boomer" generation, born in the 1950s to the mid-1960s, retire. The issue spells more wrangling in Germany's three-way ruling coalition, with Lindner, the most-senior ranking cabinet member from the pro-business Free Democratic Party (FDP), blocking legislation he himself had unveiled two months ago.

Lindner, Chancellor Olaf Scholz and Economy Minister Robert Habeck meet on Tuesday afternoon to negotiate on the budget, government sources told Reuters. The finance ministry, the chancellery and the labour ministry were not immediately available for comment.

Lindner was particularly unhappy with spending demands from the labour ministry for the 2025 budget, one source told Reuters. On Monday, he had criticised five ministries for excessive spending wishes without naming them.

The aim of the pension reform is to guarantee a pension level of at least 48% of an average wage until the end of the 2030s, allowing pensioners to maintain their living standards after retirement. Employers have spoken out against the reform as being too expensive, requiring them to increase contributions into the employees' pension pots.

Habeck had on Tuesday urged ministers to pull together. "Everyone has to stop playing poker now and talk to each other very quickly," he told the ntv tv channel, warning colleagues against playing to their own base and the media.

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