GERMANY - German MPs have agreed to increase in their retirement and make cuts in their pensions but have voted against the creation of a pension fund for members of the parliament, the so-called ‘Bundestag'.

The 613 MPs of the German parliament have agreed in a vote by name to raise their retirement age from 65 to 67 over the next years, in line with that of the general public.

Furthermore, MPs who spent more than eight years in the Bundestag will see their pension allowance cut from 3% to 2.5% of the monthly salary for each year in service. After eight years, an MP will then only get 20% of his or her monthly salary as a pension instead of 24%.

MPs' pensions will be further cut by the agreed amendment of linking parliamentary salaries to that of mayors. Daily allowances for MPs, which so far had to be determined by the MPs themselves, will in future only rise when the salaries of mayors do.

That said, there was no majority in parliament for creating a pension fund for MPs.

The Greens opposition party had demanded the creation of a funded retirement solution to which members of the parliament should contribute.

"[Creating a pension fund] would mean a considerable increase in the burden on the taxpayer in the short- and medium-term," said Gerda Hasselfeldt, MP for the government coalition party CDU/CSU, in the parliamentary debate.

She also quoted a study by an independent commission prepared in 1993 which showed "changing the pension system would not help save money".

She thirdly argued the current retirement provision for MPs was "similar to that of other comparable public bodies".

Only the province of North-Rhine Westphalia in the west of Germany has so far introduced a funded retirement plan for the members of its regional parliament.

"I am not against taking such a step for federal MPs as well - but I do not really see any advantage either," Josef Göppel, MP for the CDU/CSU, noted.

But representatives from the second government party SPD as well as the opposition parties in parliament think differently.

"I advocate a funded retirement plan for MPs," Dieter Wiefelspütz, MP for the SPD, said after the vote. "Currently, there is no majority in parliament for this but I am sure the debate on pension provision for MPs is not over yet."

"A fundamental change in the pension arrangements for MPs is unavoidable and we urge MPs to take more responsibility for their retirement provision," said Werner Hoyer, MP for the largest opposition party FDP.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

Topics