The Christian Social Union (CSU), the Bavarian sister-party to Chancellor Friedrich Merz's conservative Christian Democratic Union (CDU), appears to have persuaded its big sibling to implement one of its own pet projects: Raising the pension subsidy for older parents — colloquially known as the Mütterrente, or "mothers' pension" — one year earlier than planned.

The pension rise for mothers who had children before 1992 comes with a price tag of around €5 billion annually and is now set to be implemented on January 1, 2027, despite major cuts elsewhere in Germany's federal budget.

According to German media reports, the government still has a gap of some €172 billion ($198 billion) for its financial planning for the years 2027 to 2029.

The planned rise in 2027 is the third of three steps and adds an extra half a percentage point to the pension — that works out at around €20 per child per month for children born before 1992. Previously, mothers whose children were born after 1992 received a slightly higher percentage.

CSU General Secretary Martin Huber called the move the "completion" of the mothers' pension plan, and said that 10 million women would profit. "For many female pensioners, this rise makes a big difference," he told the RND news network. 

Who does the mothers' pension benefit?

Though the change will iron out a disparity between the pensions received by older and younger generations, experts say the measure does nothing to close the gender pay gap between men and women, or indeed overall inequality in the country. Despite the name, all parents are eligible for the "mothers' pension," as are foster parents and grandparents, if the child lived with them for a significant amount of time.

Peter Haan, specialist in state finance policy at the German Institute for Economic Research (DIW), and co-author of a study on the pension, thinks it's not an effective way to close the "gender pension gap."

The key question, as far as Haan is concerned, is who actually benefits. It does, he admitted, make superficial sense for older mothers to get the same benefits as those who had their children after 1992. "But the pensions for that generation were significantly higher than for the younger generation," Haan told DW. "And secondly, it's a 'watering can' measure that is equal for all mothers, and so doesn't specifically do anything to combat poverty among older people."

The €20 per child per month might certainly be useful for many older people with lower incomes, but the very poorest women won't profit from it anyway — because the "mother's pension" is actually deducted from any welfare benefits they receive.  

Helping families — especially Bavarian ones

The mothers' pension dates back to 2013, when the CSU pushed through the plan under Angela Merkel's government as a way to compensate parents — in practice mainly mothers —  who took time off to raise children and therefore paid less into the pension system.

Since then, the CSU has made the plan one of its key policies, not least because it is popular among its own Bavarian electorate — many of whom are older people. In the intervening years, keeping the mothers' pension has been the CSU's line in the sand in negotiations with its coalition partners the CDU and the center-left Social Democratic Party (SPD).

"Backing down on this issue would be unthinkable for a CSU leader," political scientist Ursula Münch, director of the Tutzing Academy for Political Education in Bavaria, told DW. "If the other parties do not meet it, it will refuse to support their proposals while playing on public opinion in an ageing society."

Helping the old at the expense of the young

But the idea is also unpopular among Germany's business community, who have been hoping that Merz's conservative government would, instead of increasing pensions, do more to keep more people in the job market. "All this is going completely in the wrong direction," said Judith Röder of the Federal Association of Wholesale, Foreign Trade and Services (BGA). "Everything that leads to increased welfare spending is a problem, and anything that signals less employment in an aging society is also bad. And the mothers' pension is both of those things."

"[Raising the mothers' pension] is another signal that more and more tax money or social insurance money is being distributed to older generations at the expense of active workers," Röder told DW. "It has to be financed somehow, and this is just a big loan to be paid in the future." This money would be better invested in infrastructure, she added, which benefits both businesses and society at large, rather than a particular group.

Röder also argued that older parents are already financially privileged, because they benefited from pension conditions that favored mothers in the past — for instance, before 1999, women could legally start drawing an old age pension earlier than men.

According to Haan, there are cheaper ways to help older poor people, such as checking income and wealth so that only those who actually need it get the extra money. "If you really want to reduce the gender pension gap, you have to change the labor market relations between men and women, by promoting more participation on the labor market for women," said Haan. "For example, with better childcare."

"In times when the state pension coffers are under pressure, it is difficult to take on such an expansion of costs," he concluded. "Especially for a measure like this. Of course, you can see the justification for it, but there are other measures that I think are more important."

Edited by Rina Goldenberg

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