The pensions in Germany are likely to rise sharply twice in a row – warning employers not to let the costs get out of hand. Because retirement times have long since become less rosy.
After record-breaking pension increases of around ten percent in the next two years, pensioners have to adjust to zero rounds again.
According to legal mechanisms for stabilization, there will be such zero rounds again, said Anja Piel from the board of the pension insurance on Wednesday in Berlin. In view of the tens of billions in the cost of the pension plus, there were demands from the economy not to burden the younger generation any further.
The business association Die Junge Unternehmer criticized the fact that the labor factor threatened to become even more expensive for companies. The Secretary General of the Economic Council of the CDU, Wolfgang Steiger, told the “Bild” newspaper: “The announced pension increase of over ten percent in the next two years is downright grotesque.” Piel, who represents the insured on the board of the pension insurance, rejected the criticism. The pension amount always increases in “a wave movement” that has to be considered over several years.
Pension increase forecast
According to the draft of the Pension Insurance Report 2021 available to the German Press Agency, an average rate of increase of 2.3 percent is expected by 2035. Overall, according to current calculations, the estimators assume a pension increase of 37 percent by then. The day before it became known that next July pensions could rise by 5.2 percent in western Germany and by 5.9 percent in the east. In 2023, salaries in the west could increase by 4.9 percent and in the east by 5.7 percent. The estimate is provisional – there will be clarity in March 2022. Piels board colleague Alexander Gunkel said that deviations of one percentage point are possible – “just as it can come to a precision landing”.
Reasons for the pension adjustment
After the economic slump caused by Corona, the economy picked up again. Average wages will rise in 2021 – partly because fewer people are on short-time work again. There are also more employees who have to pay contributions – and according to the so-called sustainability factor, the pension increase rises if there are more employees per 100 pensioners than in the previous year. On the other hand, the increasing number of retirees is having a dampening effect. In the crisis year 2020, however, the income subject to contributions per insured also developed more favorably than the wages of all employees.
Financial situation of the pension insurance
For this year, the income of the pension fund is estimated at 341.1 billion euros. A good 76 percent of this comes from contributions and 23 percent from federal grants. If you add all federal funds, such as those for the transfer of GDR supply systems, federal expenditure from the corresponding budget amounted to around 109 billion euros. Roughly calculated, the costs for the pension increase in 2022 are estimated at around 17 billion euros. This year, the total expenditure of the pension fund is estimated at 341.6 billion euros – almost 87 percent for pensions and 7 percent for the health insurance of pensioners.
Further development
In the long term, according to Piel, there will be more pensioners for every 100 contributors – because the baby boomers will retire. “That’s why the contribution rate will have to rise,” she said. It should remain at 18.6 percent by 2023. It is expected to rise to 22.3 percent by 2035. The pension level, which shows the ratio of pensions to wages, is currently 49.4 percent and is expected to drop to 49.2 percent by 2025 and, according to current estimates, to 45.7 percent by 2035.
Demand from employers
Against the background of the growing financial pressure on pensions, employer representative Gunkel pleaded for an adjustment mechanism that was canceled a few years ago to be reinstated. “The pensions shouldn’t rise faster than the wages,” said Gunkel. In the current year, pensions should actually have arithmetically fallen during the crisis. But cuts are excluded by law. That’s okay, said Gunkel. But this protection should be taken into account in the following year and the pension adjustment should therefore be dampened, he said. The statutory minimum pension level of 48 would then still be maintained. “And that would make long-term financing easier,” said Gunkel.
Source From: Stern
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