Good news for millions of pensioners: on July 1st, their retirement benefits will increase dramatically. That makes a few hundred euros more per year for pensioners. But the traffic light federal government is planning further measures. An overview.
On July 1st, 2022, pensions in the west will rise by 5.35 percent, in the east by as much as 6.12 percent. This means that anyone who is currently drawing a gross pension of 1000 euros will receive 1053.50 euros in the west and 1061.20 euros in the east from the summer. This is the strongest increase in decades. But future retirees can also be happy – they also benefit from the pension points, which are becoming more expensive.
The amount of the pension is determined on the basis of the so-called pension points. One pension point per year is awarded to those who have an income that is exactly equal to the average salary of all pensioners. That is 38,901 euros in 2022. The value of a pension point will rise from 34.19 to 36.02 euros in the West on July 1, 2022. In the east the plus is even higher: from 33.47 to 35.52 euros.
Calculation example: Ms A. from Dresden has collected 40 pension points in her working life. The amount of her gross old-age pension until the end of June 2022 is 1338.80 euros. From July, the amount will increase to 1420.80 euros. That’s 82 euros more per month, and a total of 984 euros per year.
The increase in pensions in summer 2022 is due to the good wage development in Germany. This is why premium income increased significantly again last year after the corona-related slump in 2020.
Anyone who has been drawing a disability pension for a long time and has not been able to benefit from various improvements since 2014 will also receive a noticeable pension increase. However, this will not come into force until July 1, 2024. In the future, those pensioners who received a disability pension from 2001 to 2018 will receive a supplement of 4.5 or 7.5 percent – and thus a higher monthly pension. A total of around three million pensioners should benefit from these supplements.
Anyone who has paid into the pension insurance for at least 35 years can take early retirement (“early retirement”). However, this is associated with deductions – the minus is 0.3 percent per year of early retirement. So if you retire three years earlier, you lose 0.9 percent of your pension every month. Important to know: This loss is lifelong! So the pension does not rise to the “actual” level when an early retiree reaches the age at which they would draw their regular old-age pension.
In order to be able to compensate for the losses, early retirees are allowed to earn certain additional amounts. Until 2020, the amount was 6300 euros per year (525 euros per month). Those who earned more had to have 40 percent of the higher amount offset against their pension.
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In connection with the Corona crisis, the federal government increased the maximum additional earnings for the years 2021 and 2022 to 46,060 euros each (i.e. a good 3543 euros per month). The traffic light coalition program states that the federal government under Chancellor Olaf Scholz wants to “delimit” this increase – i.e. make it permanent. But so far nothing has happened. However, early retirees can still breathe a sigh of relief: the lead Federal Ministry of Labor informed FOCUS Online when asked that the planned permanent “delimitation of the increased additional earnings limits from 2023 … will be implemented this year”. This means that the reform will come in the course of the year.
Also in the coalition agreement, the traffic light announces the introduction of a “share pension”.
With ten billion euros in start-up financing, the federal government wants to set up a fund at the beginning of 2023 that will be fed from premium income and invested in shares. Stocks usually score higher returns than interest-bearing investments. For the statutory pension insurance, the step means a system change. The regular old-age pension is financed using the so-called pay-as-you-go system. That means: The current expenditure of the pension insurance pays in the employees subject to social security contributions every month – the money is immediately paid out again in the form of pensions.
With the share pension, a capital stock is to be saved, the income from which finances an additional pension. Critics complain, however, that the planned ten billion deposit is far too small.
The highest German tax court, the Munich Federal Finance Court (BFH), made an important judgment on the taxation of pensions in Germany in June 2021. In it, the judges forced politicians to ensure that pensioners are not subject to so-called double taxation – i.e. they pay tax both on their pension contributions and on their future pension income.
The verdict took the traffic light into account in their coalition agreement. With the aim of reducing the tax burden on pension contributions and pension income.
So far, those who retire in 2022 have to pay tax on 82 percent of their pension, 18 percent are spared. When retirement begins in 2023, the figures are 83 and 17 percent, respectively. This fixed, personal pension allowance applies for the entire lifetime of a pensioner.
But the traffic light relieves contributors and pensioners. According to the plans, citizens can prepare themselves for two measures:
The FOCUS Online Guide answers all important questions about pensions on 135 pages. Plus 65 pages of forms.
