Core Viewpoint - The reform of Germany's pension system is currently stalled, facing significant debate and opposition due to its implications for fiscal sustainability and intergenerational equity [1][4]. Group 1: Pension Reform Details - The new pension proposal includes measures for "welfare protection" and "labor incentives," with the core provision extending the "pension level floor" until 2031, ensuring that the replacement rate does not fall below 48% [2][3]. - The government estimates that maintaining this minimum replacement rate will cost federal finances significantly, starting at €3.6 billion in 2029 and escalating to €11 billion by 2031 [3]. - The "mother's pension III" provision extends childcare credits for parents of children born before 1992, resulting in an additional annual expenditure of approximately €5 billion, fully funded by the state [2]. Group 2: Economic Implications - The proposal's reliance on tax subsidies to maintain a fixed replacement rate is criticized for shifting the financial burden onto younger contributors and potentially creating long-term fiscal risks [4][5]. - The "active pension" policy allows retirees to work while receiving full pensions, with a tax exemption on earnings up to €2,000 per month, expected to reduce tax revenue by about €890 million annually [2][5]. - Critics argue that this policy may not effectively increase labor participation, as it primarily benefits those already inclined to work, rather than attracting new labor [5][6]. Group 3: Broader Context and Comparisons - Germany's demographic challenges are not unique, as the EU faces similar issues, with the old-age dependency ratio projected to exceed 50% by 2050 [7]. - Other European countries are implementing various strategies to address aging populations, such as raising retirement ages and linking pensions to life expectancy, with examples from Spain and France [8].