Pension package
Why the pension level has nothing to do with your pension
The Union and the SPD are arguing about pensions, or more precisely: about the pension level. But what does the term actually mean – and how does it influence your individual pension amount?
The pension level should remain stable until 2031. This is what the ministers of the black-red federal government have decided. The Bundestag is expected to approve the draft by the end of the year.
But now young members of the CDU and CSU are rebelling. They believe that the pension package is “unsuitable for approval in its current form”.
But what exactly is the pension level – and what influence does it have on the actual pension payments?
In order to understand this, we first need to clarify a few terms: On the one hand, there is the standard pension. It is a calculated value that describes how much a person would receive if they had paid contributions for 45 years and consistently received the average German salary during that time.
This standard pension is compared with the current average earnings in Germany to calculate the pension level. The standard pension for average earnings 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 stay that way until 2031. Specifically, this means: A person who has paid contributions to the pension insurance based on average earnings for 45 years will receive a pension of 48 percent of the average earnings in Germany until 2031.
The pension level is calculated net before taxes. This means that health and nursing care insurance contributions are deducted from the standard pension and social security contributions are also included in the average income. However, taxes will be levied not taken into account.
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The pension level is therefore a purely mathematical quantity that says nothing about the individual pension amount. It only serves to provide an overview of how pensions rise or fall in comparison to wage developments. A falling pension level does not mean that pensions are falling, they just increase less than wages. It is even legally impossible for pensions to fall.
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Source: Stern
