Reforming the public pension scheme in Germany: The end of the traditional consensus?

The public pension scheme has been an important element of the successful model of 'Rhenish Capitalism' (social market economy) in post-war Germany. On the one hand, the promise to guarantee status maintenance during retirement sustained the incentives of the labor market in that it promoted individual effort and mobility. On the other hand, the public pension scheme definitely contributed to the legitimization of democratic politics because it corresponded to approved notions of social justice. Not the least for these reasons, in the end, this branch of the social insurance system developed with general approval from the governing parties, the party in opposition, and the social partners. After the legislation of the public pensions reform in 1989 (which became effective in 1992) it was assumed that in Germany no further structural reform should enter the political agenda during this century. Nevertheless, in 1997 another far-reaching reform proposal was enacted in 1997 (Rentenreform 1999). In the paper the background of the revived reform debate, the (disputed) elements of the reform proposal(s), and the process of compromise-building are analyzed. Special emphasis will be given to the question of whether the conflictuous reform process and the still ongoing debate indicate an end to the long-standing consensus between the large political parties and between the social partners which has prevailed in German pension politics so far and that would be, at the same time, an expression and result of notable changes of the politico-economical conditions in Germany.