Pension: This is how much the government’s reform is costing employees

Pension: This is how much the government’s reform is costing employees

The pension changes will be expensive for younger people because the government doesn’t want to upset the baby boomers – and most people don’t understand what the pension level actually means.

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It is not known how this reform is supposed to save pensions. If the current key points of the Ministry of Labor and Finance remain, the reform will achieve exactly the opposite of what it was intended to achieve. Then those who should actually be relieved pay a lot more – the younger generations.

It is unclear what remains of the current government plans after they have been put through the parliamentary debate meat grinder. In any case, the current plans neither make the system “fit for the future,” as an election slogan was called, and certainly not “generationally appropriate,” because their most important point is: The government wants to stick to the current pension level requirements until 2039, so the younger employees have to deposit more from 2027.

This is how much the contributions increase depending on your earnings

Currently 18.6 percent of gross wages go to the pension fund. Employees and employers each pay 9.3 percent of this. From 2027, the pension contribution will be around 20.3 percent, the same as at the turn of the millennium. In 2035, a good 22 percent of the gross amount will be used for pension insurance.

That doesn’t sound like a huge increase, but it means for an average earner with 4,000 euros gross: He will then pay 446 euros per month instead of the previous 372 euros. The additional monthly costs of 74 euros add up to a total of 888 euros per year – that could be a nice vacation or the savings rate for your stock portfolio.

Even with a slightly below-average salary of 3,000 euros, an additional 666 euros per year would be due for the pension fund. Anyone who earns above average gross income of 6,000 euros even pays an additional 1,332 euros. Not for his own pension, but to finance the baby boomers.

So what should the government actually do?

Source: Stern

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