Merz’ Coalition Struggles for Survival as Pension Dispute Intensifies
By Max Nebel, November 22, 2025, 08:10 AM
The coalition government led by CDU leader Friedrich Merz is facing a severe test over a contentious pension reform package. The dispute, which has escalated rapidly within days, threatens to undermine the already fragile alliance between the CDU/CSU and SPD. Multiple crisis talks are underway in an attempt to prevent the reform from collapsing amid internal resistance and to safeguard the coalition’s parliamentary majority.
Core of the Conflict: Pension Level Halt Line and Its Aftermath
At the heart of the debate is a proposed “halt line” that would stabilize the pension level at 48 percent until 2031. While there is broad agreement on this initial maintenance, the controversy arises over what happens after 2031. The government insists that the 48 percent level should be the baseline going forward, effectively securing pensions, but opponents, primarily within the CDU’s youth wing known as the Junge Union (JU), argue for a return to the previous trajectory — a lower starting point around 47 percent.
The financial consequences of this disagreement are significant. Reports from various media outlets, including tagesschau.de, estimate that the additional costs could reach into the triple-digit billions of euros by 2040, potentially amounting to around €111 billion. These extra expenses would be covered entirely through tax revenues rather than social contributions, shifting part of the pension system’s financial burden onto taxpayers who are not directly contributors, such as civil servants and many self-employed individuals.
Rising Resistance Within the CDU: Junge Union Leads the Charge
The Junge Union is at the forefront of mounting opposition within the CDU parliamentary group. JU leader Johannes Winkel has openly criticized the government’s approach, contending that members of parliament should be allowed to discuss and amend the government’s proposals freely. Approximately 18 Junge Union MPs are prepared to push back against the bill, a number substantial enough to potentially topple the coalition’s fragile majority. According to the Handelsblatt, the JU demands renegotiation, arguing the pension level after 2031 should follow the lower path, which would reduce projected costs but also lower pension levels paid from 2032 onwards.
This internal division is compounded by additional CDU members reportedly unhappy with the Merz government’s pension legislation, making the coalition’s stability uncertain.
SPD’s Firm Stance and Warning Over Collapse Risks
SPD Labor Minister Bärbel Bas has firmly rejected the accusations from union critics, dismissing claims that the SPD attempted to “sneak” the reform through the coalition. Speaking to the Tagesspiegel, Bas described the opposition as creating a “generation conflict” by rejecting part of what was a negotiated six-element reform package.
Bas stressed that the halt line until 2031 had been clearly agreed upon, and even after that, the sustainability factor would continue to apply based on the 48 percent baseline. She rejected any notion of a “hard cut” after 2031, emphasizing the coalition’s need to stay united in the face of political uncertainty.
Warning about the broader political consequences, Bas said, “I would not understand if the coalition were to collapse over a technical detail on pensions. The only beneficiaries of that would be one party, namely the AfD.” She additionally called on CDU parliamentary leadership, specifically Jens Spahn, to take responsibility in securing coalition majorities.
Behind-the-Scenes Maneuvering and Economic Anxiety
According to Die Welt, CDU parliamentary leader Jens Spahn is working behind closed doors to broker a compromise, although members of the Junge Union accuse him of insufficient toughness on the SPD side. The Handelsblatt reports growing frustration in the business community, which is increasingly skeptical of the government’s ability to carry out major reforms. Simultaneously, poll numbers reveal weakening support for CDU/CSU and gains for the AfD, further increasing the pressure on Chancellor Merz and his government.
Overview of the Pension Reform Dispute
- Pension Level: Stabilized at 48% until 2031.
- Key Dispute: Whether the baseline should remain at 48% after 2031 (government stance) or return to 47% (JU position).
- Projected Costs: An additional €111 billion (or more) by 2040, financed fully by tax revenues.
- Political Impact: 18 Junge Union MPs could block the reform.
Possible Paths Forward
Within the coalition, three potential strategies are under discussion to resolve the crisis:
- Postpone the Bundestag vote to allow more negotiation time.
- Introduce a non-binding resolution for later reform steps.
- Call a vote of confidence as a last-resort measure, which could lead to the government’s collapse.
The Junge Union dismisses the non-binding resolution as insufficient, pressing for substantial renegotiations. Chancellor Merz has warned of the difficulties posed by a minority government, questioning how effective legislation could be passed with shifting majorities in the Bundestag.
The Role of the Pension Commission
The government is pinning hopes on the upcoming Pension Commission, tasked with proposing long-term stabilization measures for the retirement system. Merz and coalition representatives insist that the commission’s decisions will determine the ultimate shape of the pension system beyond 2031. Until then, however, tensions remain high. Observers agree that this conflict goes beyond pensions alone — it tests the ability of the CDU-SPD coalition to push through vital reforms in a politically charged environment.
Sources: Bild, Handelsblatt, Die Welt, Tagesspiegel, ZDF, tagesschau.de, dpa, Spiegel