As of: March 27, 2024, 6:59 p.m
By: Sofia Popovidi
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One in five people over 80 is affected by poverty.
A financial expert explains on TikTok how basic pensions and basic security can help.
Munich – More and more people over 65 are affected by old-age poverty in Germany.
In 2021, the at-risk-of-poverty rate among 65-year-olds was 28.1 percent, higher than the EU average (27.4 percent).
Two security systems in particular can help here: the basic pension and the basic security, on which more and more pensioners are dependent.
Using various scenarios, a financial expert “Finanztip” on TikTok explains what the lowest pension citizens can claim is.
More and more seniors in Germany are at risk of poverty.
A financial expert sheds light on the lowest possible pension on TikTok.
(Symbolic image/montage) © Sven Simon/imago & imagebroker/imago
Basic pension in Germany: Financial expert explains using example calculation
In principle, 18.6 percent of the gross salary is paid into the statutory pension.
For these pension contributions you then receive so-called “earnings points” (EP), which the financial expert describes as the “currency” of the statutory pension insurance.
Finanztip explains the basic pension using a fictitious example:
“Gisela” was a saleswoman for 40 years and earned an average of 0.72 EP (72 percent) per year.
In old age she will receive a statutory standard old-age pension of 1,082.88 euros gross.
The average salary points of 0.72 that Gisela received per year will initially be doubled.
This gives a total of 1.44 XP.
However, since only a maximum of 80 percent of the average salary, i.e. 0.8 EP, can be taken into account for the basic pension, Gisela is 1.44 EP above the value.
So by how many euros can Gisela's pension be increased?
She will be credited with 0.8 XP, but she has already earned 0.72.
The difference is 0.08 EP, from which another 12.5 percent is deducted.
Gisela's basic pension is therefore calculated at 0.07 EP for 35 years, resulting in a total of 2.45 EP.
Gisela now gets this 2.45 EP on top of her small pension.
So if you multiply the 2.45 EP by the 37.60 euros you receive for one pay point, you get a basic pension supplement of 92.12 euros per month.
This means that Gisela will ultimately receive a total pension of 1,175 euros gross per month.
Source: TikTok “Financial Tip”
If even the basic pension is not enough - basic security as a second step
In times of rising rent prices and increasingly expensive food, 1,175 euros gross is just enough for many people to live on.
“But it’s even less possible,” says Finanztip.
In a second fictitious case, the expert shows where even the basic pension is not enough and then the second security mechanism comes into play: the basic security.
A prerequisite here is that the assets or deposits, if any, are used up before you are entitled to basic security.
“Michael” was a truck driver for 34 years and only earned an average of 0.55 XP (55 percent) per year.
This means he receives a statutory standard old-age pension of just 703 euros.
In addition to his standard pension, Michael receives a basic pension supplement of 56 euros.
This results in a total monthly pension of 759 euros gross.
That's not enough for him to live on, which is why he is entitled to basic security.
The basic security is calculated as follows: On the one hand, Michael has housing costs of 400 euros, and on the other hand, he also has a standard requirement (level 1) of 563 euros, which has been in effect since 2024.
Michael's pension will be deducted from this.
However, not his full pension, but only parts.
In Michael's case it is 450 euros that are deducted.
This means: He can receive a total of 513 euros in basic security.
The statutory pension of 703 euros, the basic pension supplement of 56 euros and the basic security of 513 euros are now added together.
In total, Michael has 1,273 euros gross per month at his disposal when he is old.
Source: TikTok “Financial Tip”
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(spo)