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The Politics of Parliamentary Pensions in Western Democracies

Understanding MPs’ Self-Imposed Cutbacks

Anna Caroline Warfelmann

The author takes a close look at the politics of parliamentary pensions in Australia, Austria, Canada, and Germany and enlightens the reasons of self-imposed cuts by Members of Parliament. Members of Parliament in western democracies have been under growing pressure since they legislated first retrenchments of national social security systems. They are in a special situation because they have to decide about their own financial situation as well. Thus, it is surprising that they cut their own pension benefits in recent years. The book shows that the self-imposed cuts by Members of Parliament were related to public pension reforms but, in general, were less substantial.
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5 Reforming Parliamentary Pensions. Evidence from Germany: Gradual Decline


German members of parliament have been covered by a special parliamentary pension scheme since 1968. This scheme includes only parliamentarians. Structural similarities to the civil service pension scheme were instituted when the parliamentary scheme was reformed in 1976. However, both pension systems are separate. In recent decades, parliamentarians implemented several parliamentary pension cutbacks (in 1989, 1995, 2004, 2007, and 2014), which scaled back basic parameters of the parliamentary pension scheme but did not change the nature of the special pension scheme.

5.1 Introduction

To fully understand the special parliamentary pension scheme unique to MPs and its relationship to the public pension reforms, the arrangement of the German welfare state and the design of public old-age pensions are first discussed. The work and financial compensation of German Bundestag members is briefly described to embed parliamentary pension allowances in the overall financial income package granted to MPs.

5.1.1 Public Old-Age Pensions and the German Welfare State

Germany is a prototype of the Bismarckian welfare state and is characterized by the social insurance principle. Several countries, such as Austria, France, and Belgium, adopted the German model of social insurance, and that is why the country is described as a “pioneer” (Hegelich & Meyer 2008) and the “mother of statutory insurance” (Schulze & Jochem 2007). Under this system, social security benefits enable individuals to maintain their standard of living, which is the objective of Bismarckian welfare states. Another central characteristic of Bismarckian welfare states...

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