GERMANY’S constitutional debt brake has led to chronic underinvestment, so Friedrich Merz’s move to exempt both a €500bn ($539bn) infrastructure fund and defence expenditure over 1% of GDP is good news. But the looser purse strings of Germany’s chancellor-in-waiting have emboldened the parties in his expected coalition to offer goodies to voters. One is likely to be an expansion of the Mütterrente (”mothers’ pension”), a benefit to compensate parents for years spent raising children rather than working. It is almost exclusively claimed by women.

A pet project of the Christian Social Union, the Bavarian sister party of Mr Merz’s Christian Democrats (CDU), the Mütterrente was introduced in 2014. Those who had children before 1992 were credited with up to a year of public pension payments, those afterwards with up to three. In 2019 the difference was narrowed. The incoming coalition wants to eliminate it altogether.

There is no reason why parents who had children before 1992 should be disadvantaged. But the logic of pensions for years not worked is complicated. Economists at the Centre for European Economic Research, in Leibniz, argue that contributions from grown children keep the pay-as-you-go (PAYG) pension system going, and that childless pensioners are thus relying on other people’s children, whom they did not help raise. They propose funding mothers’ pensions by cutting benefits for those without children. But politicians have shied away from such debates, so the Mütterrente remains an unfunded liability.

The top-up of mothers’ pensions will cost around €5bn this year and €50bn over two decades. That is trifling compared with the debt Germany is taking on for defence and infrastructure. But making unfunded pension promises at a time when Germany is in recession (and ageing rapidly) is irresponsible. The younger cohort of the CDU agrees. “It’s not the right sign,” says Pascal Reddig, a 29-year-old novice MP for the CDU. Still, he admits that it is a done deal. The grannies who qualify will get an additional €20 a month. That will do little to help the 20% of the elderly at risk of poverty; for that goal a targeted benefit would be better. But it will add to the burden on the stretched PAYG system. ■

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