Thursday March 18, 2021
Mini increase in the east
Crisis brings West pensioners a zero round
The virus crisis is also noticeable on the pension notification: After years of increases, German retirees in the West are now receiving no increase. The east faces a minimal increase in salaries.
West German pensioners have to accept a zero round as a result of the coronavirus pandemic. In the east there will only be a mini increase of 0.72 percent. Federal Labor Minister Hubertus Heil announced this. According to data from the Federal Statistical Office and the Federal Pension Insurance, the pension will be adjusted by July 1st. Due to the Corona crisis, this does not provide for the usual increase in old-age benefits in western Germany in the summer.
"Since the statutory pension guarantee prevents pension cuts, the current pension value in West Germany from July 1, 2021 remains at EUR 34.19, although the arithmetical pension adjustment is negative." Last year there was a strong increase of 4.2 percent in the east and 3.45 percent in the west. The last time it happened in 2010 – the year after the financial crisis – that a pension increase was canceled. Since then, pensions have increased every year.
"Even and especially in times of crisis such as the current Covid 19 pandemic, pensioners can rely on the statutory pension," said Heil. In 2020, they would have benefited from the good wage development in 2019 with a significant increase in pensions, although the employees had already been affected by the negative consequences of the pandemic. "With a time lag, the crisis is now also affecting pension adjustments."
Gradual adjustment continues
The wage development is the basis for the pension adjustment. The wage development, which is decisive for the pension adjustment, in the old federal states was reportedly minus 2.34 percent. In addition to the wage development, the amount of the pension adjustment is also determined by a sustainability factor and a factor for pension expenses. According to the ministry, the aforementioned influences result in an arithmetical pension adjustment of minus 3.25 percent. However, since 2009 the pension guarantee has ensured that the application of the pension adjustment formula does not lead to a reduction in the current pension value.
The fact that pensions in the east are rising slightly, unlike in the west, despite the crisis, is due to the so-called adjustment staircase: until 2024, the pension value in the east will gradually be adjusted to that in the west until it is the same.
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