Changes to disability pensions will come into force from July. These changes could make a difference for many retirees.
Berlin – Anyone who is no longer able to work for health reasons but has not yet reached retirement age is entitled to a disability pension (EM pension) from the German pension insurance. However, from July 1st there will be some changes regarding this type of pension. We show which conditions currently apply to the EM pension and which changes will come into force from July.
Pension due to illness: Anyone who is entitled to a disability pension
Every year around 350,000 people in Germany apply for disability pension, but not everyone gets it. In principle, the EM pension is an option if an employee's ability to work is restricted for at least six months due to illness and they can therefore work less than three hours per day. Anyone who can still work three hours a day, but not six hours, is entitled to partial disability.
After the application for partial or complete disability has been submitted to the German pension insurance, it will first check whether the ability to work can be improved through medical or professional rehabilitation. Employees are only entitled to an EM pension if this can be ruled out.
In addition, the applicant must have been insured in the pension insurance for at least five years. Insurance contributions must have been paid for at least three years within these five years. The full and partial EM pension can also be applied for online on the German Pension Insurance website.
Amount of the disability pension: This is how it is calculated
The amount of the disability pension depends on various factors. What matters is how many earnings points an employed person has accumulated in their working life. The earnings points are awarded by the pension insurance and reflect the amount of earnings over the years of a working life. The difference to the regular retirement age, which results from occupational disability at an earlier point in time, is also important for the amount of the EM pension. As with the old age pension, the amount of the EM pension is determined based on the period of employment.
In addition, there is the so-called attribution time. “This means that it is acted as if the person concerned had continued to work with an income that corresponds to the average of their previous job,” says the federal government’s website. If those affected have no longer been fully active within the last four years before submitting the application, their reduced income will not be taken into account for the average income.
As with early retirement, a deduction is also deducted from the pension due to reduced earning capacity. However, the deduction is never higher than 10.8 percent of the pension. In the case of a pension due to partial disability, you are entitled to half of the pension amount determined in this way.
Reduced earning capacity for pensioners: Up to 7 percent more pension in the summer for EM pensioners
From July 2024, the German pension insurance will pay a flat-rate surcharge on around three million EM pensions. This is due to the law passed by the federal government in 2022 to adjust pensions and improve benefits for disability pensioners.
All recipients of EM pensions who received a disability pension for the first time between January 1, 2001 and December 31, 2018 should receive the supplement. The surcharge is calculated on a staggered basis: recipients of the EM pension, which they received for the first time between January 1, 2001 and June 30, 2014, are granted a surcharge of 7.5 percent of their actual pension.
Those who received a disability pension for the first time between July 1, 2014 and December 31, 2018 will be entitled to a flat-rate supplement of 4.5 percent of the actual EM pension from July 1, 2024. According to the German Pension Insurance, all pensioners who are entitled to the improvements will automatically receive the supplement. There is no need to submit a separate application.
Pensioners have to wait for payment: higher pensions come in the middle of the month
How the lump sums are to be paid out to those affected from July 1st is planned in two stages due to the “complex, technical implementation” emphasized by the German Pension Insurance: In a first step, a simplified surcharge is to be paid from July 1st, 2024. The transfer should be made separately from the current pension in the middle of each month.
In a second stage, the surcharge calculated by the German pension insurance will be paid from December 2025. The transfer should then be made in one sum together with the recipient's current pension. According to the German Pension Insurance, there is no provision for retroactive offsetting against the simplified supplement that has already been paid out. (fh)