As of: February 8, 2024, 8:21 a.m
By: Marvin K. Hoffmann
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Many pensioners ask themselves by what percentage their pension will increase in 2024.
Five important factors play a role.
Hamm - Good news for all pensioners: The pension will also increase in 2024. There was already a pension increase in 2023, which meant that the pensions in East and West were equalized.
Now there will be another one; according to estimates by the federal government, an increase of 3.5 percent could be expected.
Some experts even assume more.
Pensioners are wondering by what percentage the pension will be increased in 2024
It is therefore not yet possible to say with certainty by what percentage the pension will increase on July 1, 2024.
It depends on important factors.
The Federal Ministry of Labor and Social Affairs (BMAS) has already decided on a time when it will announce the good news to pensioners: they should have certainty at the end of March.
“The pensions are usually adjusted on the basis of the so-called Pension Value Determination Ordinance, which is decided by the Federal Cabinet (usually at the end of April) and which, subject to the approval of the Federal Council (usually in June), comes into force on July 1st of each year,” explained the BMAS recently in response to a request from
wa.de
and added: “Binding statements on the actual amount of the pension adjustment as of July 1, 2024 will only be possible at the end of March 2024, when all the necessary data from the Federal Statistical Office and the German Pension Insurance Federation are available.”
These data on the development of gross wages and salaries per employee according to the national accounts form the basis for the adjustment of pensions.
Pensions are increased based on the statutory pension adjustment formula
Pensions are increased based on the statutory pension adjustment formula.
“The following applies: The statutory pension is a wage replacement benefit and generally follows wages,” explains the BMAS.
Simply put: when wages rise, pensions also rise.
But rising wages alone do not mean a pension increase.
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The gross wage factor, as we explained at the beginning, reflects the development of average gross wages (subject to contributions).
“The decisive factor here is the development of the last year compared to the year before last,” clarifies the Federal Agency for Civic Education (bpb).
However, the wage increase will not be passed on directly to pensioners, who in Germany can apply for something other than citizen's benefit if they are in need.
Rather, according to
bpb,
the amount is “slowed down by the contribution rate, the Riester factor and the sustainability factor”.
Since 2011 there has also been the catch-up factor.
Five factors therefore play an important role:
Gross wage factor:
It is based on the development of average gross wages (subject to contributions).
Contribution rate factor:
Changes in employees' pension insurance contributions also play a role - this means that the burdens borne by the insured should also be borne by pensioners.
Riester factor
: “The burdens that arise for actively employed people through the development of subsidized private pension provision (Riester pension) are transferred to the pension adjustments.
Starting with 0.5 in 2002, this pension share has been increased annually.
However, since the increase was suspended in 2008 and 2009, the pension share only reached the final level of 4.0 in 2012.
In the years when the pension share was increased, the pension increases were reduced by 0.5 percentage points,” explains the
bpb
on this factor.
Sustainability factor:
This factor is intended to take into account the numerical ratio of pension recipients and contributors (pensioner quotient) when making pension adjustments.
The effects according to
bpd
: “If the number of contributors falls compared to the number of pension recipients, which is to be expected in the medium and long term given demographic developments, then the sustainability factor will lead to cuts in pension adjustments.”
Protective clause and catch-up factor/need for compensation:
This lever is intended to prevent the worst case scenario for pensioners - a possible reduction in the nominal pension in the event of stagnating or declining wages.
“To prevent this, a protective clause has been built into the pension adjustment formula.
It stipulates that nominal pensions must not fall,” explains the
bpd
.
However, the missed adjustment cuts will be made up at a later date and will slow down corresponding pension increases.
Only when all of this data is available will pensioners know by what percentage their pension will be increased in 2024.
Until then, you might want to familiarize yourself with some of the changes that 2024 has brought.
Among other things, the deduction for the “pension for long-term insured people” has also increased.