Germany finalises pension reform

Berlin - German Chancellor Angela Merkel's coalition agreed on Monday on the final details of a flagship pension reform to lower the retirement age for some people that economists have warned could hurt Europe's biggest economy.

The coalition parties overcame differences over some details, clearing the way for lawmakers to vote on it on Friday.

The plans are almost certain to be passed thanks to a big parliamentary majority for Merkel's "grand coalition" of conservatives and the centre-left Social Democrats (SPD), although some of Merkel's Christian Democrats may oppose it.

"The parliamentary parties of the coalition have agreed on a pensions package," conservative Volker Kauder said, adding it was "a good example of how the grand coalition can get its work done".

Official

The early retirement proposal is a pet project for the SPD who are committed to social justice but economists have warned that Germany, with its ageing population and shortage of skilled labour, could suffer under the cost.

In 2007, a previous Merkel-led grand coalition agreed to gradually raise the official retirement age by two years to 67 between 2012 and 2029.

Under the new plans, some people will be allowed from July to retire on a full pension at 63, provided they have worked for 45 years.