As planned, the approximately 21 million pensioners in Germany will receive more money from July 1st. Just as the pension insurance report has been envisaging since the fall. In addition, the basis for calculating pensions in East and West will be further aligned.
Pensions usually increase on the first of July each year. They are based on wage developments in the country. When wages fall, however, a so-called pension guarantee prevents retirement benefits from falling. In such cases, zero rounds occur. Here are answers to some key questions:
By how much will pensions increase?
Pension payments will be increased by 4.39 percent in western Germany and by 5.86 percent in eastern Germany. With a monthly pension of 1,500 euros, for example, this corresponds to an increase of around 66 euros in the west and 88 euros in the east. Because it is a percentage surcharge, the payment amount increases more slowly for lower pensions than for higher pensions. For example, if you don’t have 1,500 but 1,000 euros a month, you get around 44 euros more in the west and 58 euros in the east.
Will inflation be offset?
By how much the pensions rise depends on the development of average wages and not on prices. It can therefore happen that the bottom line is that the purchasing power of pensioners falls because prices are rising faster than retirement benefits. At the moment this is the case. For this year, leading economic research institutes expect inflation of six percent, which would be higher than the pension adjustment.
Pensions rose more slowly than the cost of living last year. According to calculations by the Federal Statistical Office, consumer prices in Germany rose by 7.9 percent on average in 2022 compared to the previous year. Pensions rose last year by 5.35 percent in the West and by 6.12 percent in the East. In the long term, however, pensions have risen faster than prices in recent decades, the Federal Ministry of Labor emphasizes.
What is the difference in pensions between men and women?
In Bavaria, according to data from the State Statistical Office, in 2021 men received payments from the statutory pension funds of EUR 16,529 gross per year, i.e. EUR 1,377 per month. Women received 13,003 euros a year, i.e. 1,083 euros a month. The pension providers point out that these average values also include very low pensions, which are paid, for example, if someone has only paid into the pension fund for a few years and later became a civil servant or became self-employed.
What developments can be expected in the next few years?
The same applies to the next few years: the more wages rise, the more pensions will also be raised. If inflation falls at the same time, the pension increase over the next few years could at least compensate for a loss in purchasing power. But that is not certain. In any case, the pension funds state that they are currently in a better financial position than was expected a few years ago. Because the labor market and wages have developed better than many experts had predicted.
Will pensions continue to rise faster in the East than in the West?
No. The alignment of pension values in East and West Germany will be completed this year. In order to achieve this harmonization, pensions in the east have increased by higher percentages than in the west in recent years. In future there will only be a uniform percentage for East and West.