Status: 06/30/2023 11:03 a.m
Pensions will rise again significantly from July 1, 2023 – by 4.39 percent in the west and 5.86 percent in the east. One year earlier than planned, the pensions in East and West are thus aligned.
Good news for the approximately 21 million pensioners in Germany: From July 1st they will receive significantly more money. In the west the pension increase is 4.39 percent, in the new federal states the increase is 5.86 percent. This means that the pensions in West and East have already been aligned a year earlier than planned. Originally, the pension adjustment was not planned until July 1, 2024. At the same time, the increase is well above what the German pension insurance had forecast in autumn 2022 – 3.5 percent in the west and 4.2 percent in the east.
According to the Federal Ministry of Labor, the unexpectedly positive development in pensions is due to the stable situation on the labor market: wages have also risen in some sectors. Since the pensions are based on wage developments, this has also led to the increase in pensions. However, the current high inflation is weakening the plus again.
Taxable after pension increase: what to do?
The impact of increases on the taxable portion of the pension is usually small. However, it can happen that after an increase, the taxable part of the pension exceeds the basic allowance (for 2023: 10,908 euros for singles, twice the value for married people). Then a tax return is required.
Pensioners can also claim tax-reducing expenses for health, craftsmen, donations or income-related expenses, so that the actual tax burden is then usually moderate. Payroll tax assistance associations point this out. Pensioners must generally state the annual adjustment amount in their tax return. In addition to the taxable portion of the pension, other taxable income – for example from renting – is offset against the basic allowance and must be taken into account in the question of tax liability.
Pension allowance decreases for future pensioners
The amount of the pension allowance – i.e. the tax-free portion of the pension – depends on the year of retirement. It will decrease by 1 percent annually for future generations. Example: If an employee retires in 2023, 17 percent of the salary is tax-free. If you retire in 2024, the tax-free portion is only 16 percent.
Retirement at age 63 possible with deductions
If you have paid into the pension insurance for 45 years, you can retire earlier without deductions if you have been insured for a particularly long time. The minimum age for retirement depends on the year of birth. But even after 35 years of insurance, a pension is possible, but from the birth cohort of 1964 permanent deductions of up to 14.4 percent have to be accepted. The minimum age for this is 63 years of age.
The age limit increases gradually to 67 years
School and study times or child-rearing periods, among other things, are counted towards the insurance period. The retirement age will increase in stages up to 2029. For insured persons born in 1964 or later, the standard retirement age of 67 years applies.
Further information
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NDR 1 Lower Saxony | 06/28/2023 | 7:05 p.m