Pension increase fails for millions of retirees | Free press

Berlin (dpa) – For many of Germany’s 21 million retirees, the usual pension increase will not take place in July. Due to the Corona crisis, the pension in the west will remain at the current level and in the east it will increase by at least 0.72 percent.

That had already been calculated since last summer. Federal social minister Hubertus Heil made it official on Thursday: “With some delay, the crisis now also has consequences for the pension adjustment,” said the SPD politician. In the Corona year 2020, there was initially a sharp increase of 4.2 in the east and 3.45 percent in the west.

Why is Corona bringing retirees in the West a zero round this year and only a small increase in the East? This is based on the annual recalculation of pensions based on a complex “pension adjustment formula”. Among other things, the numerical ratio between contributors and pensioners is taken into account, but especially the development of wages in the country in the previous year.

Due to the economic problems of many companies, short-time working and rising unemployment, wages have fallen on average – according to the Federal Bureau of Statistics in the West by 2.34 percent. Mathematically, there would even be a pension cut this year. But this is ruled out by a “statutory pension guarantee”. As a result, salaries remain at the current level in the West. “Even and especially in times of crisis, such as the current Covid 19 pandemic, retirees can rely on the statutory pension,” said Heil.

The fact that, despite the crisis, pensions in the East are rising slightly, unlike in the West, is due to the so-called adjustment step: in 2024 the pension value in the East will gradually be adjusted to that in the West, until it is the same.

The last time it happened in 2010 – after the financial crisis – that a pension increase was canceled. Since then, pensions have risen every year, by 17 percent in the west alone between 2015 and 2020 and by about 23 percent in the east, the German pension insurer said Thursday. “The pensioners have more money in their pocket in real terms, as the pension adjustments were noticeably higher than the price increase,” said President Gundula Roßbach.

Specifically, last July, according to the federal government, the so-called standard pension was increased by more than 51 euros to about 1,539 euros in the west and by about 60 to 1,495 euros in the east. The standard pension is a comparative figure that would be given arithmetically to those who have paid contributions to the pension fund as an average earner for 45 years. According to pension insurance, the average gross pension that is paid out after a minimum of 35 insurance years in Germany is currently 1,413 euros.

The good news: after the Corona dent this year, another substantial pension increase is expected for 2022. In the annual retirement insurance report, presented in November, the government suggested that there could be a 4.8 percent increase in the west and 5.56 percent in the east by 2022, and a further increase of more than 3 percent. years later Percentage.

In the long term, however, pension insurance faces major financial challenges in an aging society: While there were 48 retirees for every 100 contributors in 2016, according to a model calculation of German pension insurance, there should be 70 by 2045. Politicians are looking for solutions on how this should be funded in the long term, if possible without increasing contributions for those who pay too much and without messing up the pension amount on the other side.

Until 2025, another provision applies that the pension level may not fall below 48 percent of the wage level and the premium for the pension may not exceed the 20 percent limit. There is still no solution for the time after that.

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