The bill

Proposals by chancellor Gerhard Schröder for an overhaul of Germany's state pension system on Friday overcame their final parliamentary hurdle, after the Bundesrat - the second legislative chamber representing the federal states - voted in support of the reform package. The result of Friday's vote became a foregone conclusion after two crucial swing states, Brandenburg and Berlin, announced on Thursday they would back the government bill, which seeks to buttress the creaking state system by introducing private provisions. Drawn up by Walter Riester, the labour and social affairs minister, the plans are a central item in the government's programme for economical and structural reform, and Friday's vote is widely expected to enhance Mr Schröder's reputation as a moderniser ahead of next year's general election. Although Mr Riester's reforms have been applauded by industry, trade unions and banking and insurance providers alike, many have criticised the bill for its complexity and the rigidity of its approach to private pension schemes. Under the proposals, Germans will be able to invest an additional 1 per cent of their gross wages in private or occupational schemes, rising to 4 per cent by 2008.