Pensions are expected to increase by up to 4.2 percent
The more than 20 million pensioners in Germany According to initial calculations in the federal government, the pension increase in the coming year will again lag behind the general price increase. According to the current status, pensions could rise by a good 3.5 percent in the west and by around 4.2 percent in the east as of July 1, 2023. This emerges from the draft of the pension insurance report 2022, which was presented to Reuters on Saturday. The specific pension increase will not be known until next spring, when the data on wage developments will be available.
The annual pension adjustment would thus remain below the inflation rate of 7.0 percent expected by the federal government for 2023. As early as 2022, pensioners had to record a loss of purchasing power despite a significant increase. As of July 1, pensions had been increased by 5.35 percent in the West and by 6.12 percent in the East. However, the government expects prices to rise by an average of 8.0 percent this year.
The calculations are based on the October numbers of the estimators of the pension insurance. Wage development is decisive for the amount of the pension adjustment. The expected strong wage increases are mainly due to the high inflation return. In the draft report for 2022, the Federal Ministry of Labor assumes a gross wage increase per employee of 4.5 percent. In the two years thereafter, increases of 5.0 and 4.7 percent are expected. In addition, the number of employees will initially increase.
Unhurt speaks of a noticeable increase in pensions
“According to the data now available, pensioners can again expect a noticeable increase in pensions in the summer,” said Federal Labor Minister Hubertus Heil (SPD) of “Bild am Sonntag”. He announced that he wanted to keep the pension level stable in the long term: “Next, we will take care of keeping the pension level stable in the long term, well beyond 2026.”
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The pension level is currently 48.1 percent and, according to the pension insurance report, will remain just over 48 percent until 2024. In 2025, the legal stop line will apply, according to which the pension level must be at least 48 percent. The current pension value is then to be raised above the 48 percent mark. The stop lines for the pension level and contribution rate expire in 2025. According to current calculations, without an extension, the pension level will drop to 46.6 percent in 2030 and 44.9 percent in 2036. The pension level before taxes says little about the amount of an expected pension. It describes the amount of a standard pension after 45 years of insurance based on the current average earnings of all insured persons.
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For the pension finances as a whole, the ministry speaks of pleasing results in the draft. The pension insurance fund should be well stocked by the end of the year: your sustainability reserve could increase to 41.7 billion euros, which corresponds to 1.66 times a monthly expenditure. The contribution to pension insurance from currently 18.6 percent of gross wages will probably only have to increase to 19.3 percent in 2027 and will therefore remain stable longer than previously expected. The increase in the contribution rate is also lower in the longer term.
However, more money also flows into the pension fund without a higher contribution rate, since the contribution is due on an ever-increasing proportion of the payslip. At present, employees and their employers in the West have to pay the contribution on incomes of up to EUR 84,600. According to the report, this annual contribution assessment limit could reach six figures for the first time in 2026 at EUR 100,200.
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