Full pension increase due to Corona - from 2022 retirees can look forward to nice increases

After a zero round in 2021, retirees can look forward to high pension increases.

Because an important braking factor for pension increases is suspended.

Berlin - For years, retirees in Germany have been happy about rising pensions.

Then came the shock that year.

In March it became known that the normal increase in old-age pensions in the summer of 2021 would be canceled due to the corona crisis in western Germany.

In the east there will only be an increase of 0.72 percent. 

But in the following years this stalemate will be more than compensated for for the more than 21 million pensioners.

The Federal Government's pension insurance report shows that the retirement benefits are to increase by 4.8 percent for western pensioners and 5.6 percent for eastern pensioners as of July 1, 2022.

It should continue in the following year.

In 2023, the pension increase in the old federal states should amount to 3.15 percent and 3.88 percent in the new federal states.

For 2024, on the other hand, the pension insurance and the federal government expect a zero rate for western pensioners and an increase of 0.7 percent for eastern pensioners.

Pension plus due to Corona: the braking effect of the catch-up factor suspended

The reason for the sharp increase in the next two years is a change in the pension formula.

The federal government suspended the so-called catch-up factor as early as 2018, initially until 2025. The catch-up factor was introduced in 2007 to compensate for the pension guarantee.

This prevents pensions from falling when wages fall.

According to the catch-up factor, possible pension increases are only half as high as provided for in the pension adjustment formula if wages rise again after a reduction.

This should continue to apply until the pension reduction that has been avoided is compensated for. 

In the current situation, this has serious consequences.

Because of the pandemic, wages in Germany fell by 2.3 percent last year, according to the pension insurance.

Because of the pension guarantee, however, the pensions do not decrease accordingly.

Pension plus due to Corona: by 2050, an additional pension of 100 billion euros should come together

If, however, salaries return to their old level after the crisis, the suspension of the catch-up factor comes into play.

Because for the pension, reaching the old wage level counts as a wage increase and the pensions rise in full.

With the catching-up factor, this increase would only be half as high.

That is why the pension insurance report assumes a total pension increase of 32 percent for the period 2020 to 2034, which corresponds to an average annual increase of two percent. 

This costs a lot of money.

The Max Planck Institute for Social Law and Social Policy has

calculated

for the

FAS

that the pension increase will amount to around four billion euros in 2022 alone.

By 2050, the costs due to the suspension of the catch-up factor should amount to almost 100 billion euros. 

Pension plus due to Corona: FDP and parts of the CDU for reintroduction of the catch-up factor

What makes the retirees happy causes criticism in some parties.

So the FDP wants to reintroduce the catch-up factor.

“This suspension of the catch-up factor amounts to manipulating the pension adjustment formula to the detriment of the younger generation.

Because in the current situation it will inevitably lead to an unequal distribution of burdens in the statutory pension insurance - at the expense of taxpayers and contributors of the younger generations, ”wrote the Liberals in July last year.

Chancellor Angela Merkel rejected a return of the catch-up factor last year.

But parts of the CDU advocate reversing the change to the pension formula, including Wolfgang Steiger, Secretary General of the CDU Economic Council.

He told

Bild.de

: "That would only be fair to today's employees and above all to the younger generation, who will be faced with an ever greater burden in the future."

List of rubric lists: © Jochen Eckel via www.imago-images.de