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Germany: The federal cabinet has approved Pension Package II

 The federal cabinet has approved Pension Package II, paving the way for the plans of Labor Minister Hubertus Heil (SPD) and Finance Minister Christian Lindner (FDP). Following months of negotiations, particularly due to disputes within the finance department, the draft law is now set to be presented to the Bundestag. The Chancellor's Office has requested an expedited process, so the Bundesrat can discuss the reform on July 5.


The aim of the pension package is to fix the pension level at 48 percent and ensure that pensions continue to rise in line with wages. Additionally, a generational capital fund will be established, where the government plans to invest at least 200 billion euros, mostly from federal debt, in the stock market by the mid-2030s. The interest earnings are intended to help mitigate the expected significant increase in pension contributions.

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