Merz coalition pension row tests Germany's European security role

A domestic fight with continental stakes

Germany's governing coalition has spent the autumn fighting over pensions. Few people outside the country follow the details of German early-retirement rules, but the dispute has grown into a test of whether Berlin can keep acting as the main backer of Europe's security, especially Ukraine's. Chancellor Friedrich Merz has tied the two together himself. By early November his CDU/CSU bloc and its partner, the Social Democrats (SPD), still had not agreed on the core of the pension reform. Merz is holding to a timetable that has already slipped once.

The argument came to a head in early October. Conservatives pressed the SPD to produce draft laws on pensions and the labour market. CDU parliamentary leaders reportedly considered blocking Finance Minister Lars Klingbeil's income tax reform until those drafts arrived.12 One official described the mood as "real traffic-light vibes", a reference to the infighting that brought down Olaf Scholz's three-party coalition.12 President Frank-Walter Steinmeier reportedly phoned Klingbeil and Interior Minister Alexander Dobrindt about the care-reform dispute. That is a highly unusual step for a mostly ceremonial head of state. According to Der Spiegel, Steinmeier had come away from a conversation with Merz believing the coalition could collapse.12 The government would not confirm the calls and denied it was in crisis.12

What the fight is actually about

The main point of conflict is the "Rente mit 63", which lets people with 45 years of contributions retire early without a pension cut. A government pensions commission presented 33 recommendations in June. They included tying the retirement age to life expectancy and adding a mandatory capital-funded savings scheme modelled on Sweden's.14 The commission also proposed scrapping the penalty-free early exit and raising the earliest retirement age to 64.18 At the time, Merz and then-Labour Minister Bärbel Bas both promised to implement the package in full. Bas said measures could not be cherry-picked.14

That agreement broke down after the September state elections. The CDU won no constituencies at all in Saxony-Anhalt, a state where it had led every government since 2002.11 In Mecklenburg-Western Pomerania, Merz called the result a "disaster".11 SPD leaders then said they wanted to "revise" the reforms. Klingbeil argued that if voters see reforms only as a threat, the content has to change, not just the messaging.11 The SPD also wanted to soften the care reform, reopen the 2027 budget and revisit inheritance and wealth taxes.11

The dispute does not run neatly along party lines. Three CDU state premiers in eastern Germany oppose ending the early-retirement rule.6 The CDU's business wing wants it gone.4 Public opinion favours the SPD on this point: a ZDF Politbarometer found that 74% of respondents oppose abolition, while 83% still consider pension reform important.26

A minister falls, the timetable slips

On October 12, Bas resigned as labour minister and SPD co-leader, citing the death of her stepdaughter and personal attacks during her grief.19 The next day, Merz used the employers' conference to publicly set a deadline for her successor, Alexander Schweitzer. He complained that the commission's proposals had been waiting since June: "That is already too long for me."9 Merz wants a cabinet decision before the end of the year, followed by passage in the Bundestag and Bundesrat in the first quarter of 2027.9 That is a retreat: he had originally wanted the Bundestag to vote in December.23

Schweitzer has opposed abolishing the Rente mit 63 in the past. He now says commission proposals are only that, and that the coalition agreement promised to keep the 45-year rule in principle.28 Union parliamentary leader Thorsten Frei has said he is open to transition periods and protective provisions.21 As of late October, the labour ministry still had not produced a draft bill.2324 Merz, meanwhile, says he wants the commission's proposals implemented "exactly as they stand".16 Those two positions cannot both hold before Christmas. Something has to give, and the most likely outcome is a diluted rule with long transition periods.

The atmosphere has become personal. Mecklenburg-Western Pomerania premier Manuela Schwesig accused the conservatives of "inhumane" treatment of Bas, and Merz rejected the charge.1 On November 2, Bas spoke publicly for the first time. In an ARD interview she criticised Merz and a "culture of silence" in Berlin, and said the coalition leadership had agreed to hold back the pension draft until after the September elections.29

Merz's European security argument

Merz has used foreign policy to argue that the coalition has to survive. On October 4 he made an unannounced trip to Kyiv. There he warned that some people in Germany did not grasp what it would mean if the federal government could no longer do its job, and said a failure would have "immeasurable consequences for all of Europe".8 He repeated the point on German television: "All of Europe depends on stability in Germany."78 He linked the reform package directly to the government's survival.11

Germany's role explains why he takes this line. Since Merz took office in May 2025, Germany has become Ukraine's largest military donor, overtaking the United States as American support declined.36 Total German support since the war began is more than €43 billion.38 In Kyiv, Merz announced about €1 billion in military aid, including long-range strike weapons and drones, plus €350 million for energy repairs ahead of winter.38 German companies signed deals with Ukraine worth billions. Reports put the value at about €6.6 billion across 14 agreements33, while Zelenskyy cited more than €8.5 billion across 15.38 Merz described the aid as a matter of German self-interest. He pointed to a failed drone attack at Leipzig/Halle airport that Berlin blames on Russia, and to daily cyberattacks on German networks.3840

The capacity to pay for this was built at the start of Merz's term. In 2025, a constitutional change exempted defence spending above 1% of GDP from the debt brake.5 Economic institutes have since raised Germany's 2026 growth forecast to 1.3%, citing debt-financed infrastructure and defence spending as a major driver.12 German security policy, in other words, rests on a cross-party arrangement that the current pension fight is putting under strain.

Where the reporting diverges

Accounts differ most on how close the coalition is to breaking. The government describes ordinary disagreement and calls cooperation "constructive and reliable".12 SPD parliamentary leader Matthias Miersch has said he is "very sure" the coalition will cope.7 The outlet NIUS, citing participants at a closed meeting, reported that Merz threatened to fire SPD ministers and govern as a minority.10 In public, Merz ruled out a minority government without the SPD and said such talk endangers both the country and his party.3 He has also said there are "limits, even for me".16 Right-leaning German outlets, citing Bild and Welt, suggest Schwesig may be planning to bring the coalition down in 2027.2 That claim is speculative.

The most convincing reading is that neither side can afford to end the coalition right now. Commentators point out that there is no agreed successor to Merz, and that a snap election would probably strengthen the far-right Alternative for Germany (AfD).11 An INSA poll put the AfD at 30% nationally for the first time, with the Union at 18%.8 CSU leader Markus Söder and Saxony's Michael Kretschmer warned that another collapse of a democratic federal government would be "a penalty kick with no goalkeeper" for the AfD.11 Fear of the AfD is holding the coalition together. It is not a sign that the partners trust each other.

The security risk is erosion, not a sudden collapse

The bigger danger for Europe is a gradual loss of domestic support rather than a dramatic breakup. In the September ARD Deutschlandtrend, more than half of eastern Germans said German aid to Ukraine had gone too far. Nationwide, more than four in ten agreed, the highest share since the full-scale invasion began.31 AfD co-leader Alice Weidel attacked Merz's Kyiv trip and claimed the aid money was missing from the pension and health funds.3136 That framing turns the pension dispute into an argument against helping Ukraine, which is the outcome Merz most needs to avoid.

His approval ratings are low. Only around one in ten Germans say they are satisfied with his work.8 As long as he keeps insisting on the full pension package, his partners will keep calling the programme socially unfair, and his opponents will keep linking social cuts to spending on Ukraine. A compromise on early retirement would cost him with his business wing and the young conservatives. It would also make it harder to frame Germany's Ukraine commitments as one side of a choice between pensions and security. For Europe, that compromise is probably the better outcome.