Pension package
Why the pension level has nothing to do with its pension
With the pension package, the Federal Cabinet decided to stabilize the pension level. But that means nothing for the individual pension height. What is behind the term.
The pension level should remain stable-until 2031. This is how the Minister of the Black and Red Federal Government decided. The Bundestag should decide on the draft by the end of the year.
But what is the pension level at all – and what influence does it have on the actual pension payments?
To understand this, a few explanations of concepts are needed: on the one hand there is the standard pension. It is a arithmetic value that describes how much a person would get who has paid for 45 years and received the average earnings of the Germans during the time.
This standard pension is compared with the current average earnings in Germany for calculating the pension level. The standard pension then results in the pension level.
Pension package: 48 percent by 2031
The pension level is currently 48 percent. With the new cabinet decision, it should remain until 2031. Specifically, a person who has paid contributions to average earnings to pension insurance for 45 years will receive 48 percent of average earnings in Germany until 2031 as a pension.
The pension level is calculated net before taxes. This means that the standard pension is deducted from the standard and nursing insurance contributions and the social security contributions are also included in the average income. But tax levies arenot taken into account.
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The pension level is therefore a purely mathematical size that does not say anything about the individual pension height. It only serves the overview of how pensions increase or fall compared to wage development. A falling pension level does not mean that the pensions fall, they only increase less than wages. It is even excluded by law that pensions fall.
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Source: Stern
