Pension contribution rate falls slightly

Pension contribution rate falls slightly

Despite foreseeable financial pressure on the pension fund, contributions will be lowered slightly next year and pensions will be increased significantly.

The contribution rate for the statutory pension insurance will fall by 1. January by 0.1 points to 18.6 percent. The federal cabinet voted this wednesday in berlin to pass a corresponding ordinance from the ministry of social affairs.

The reduction is possible because pension finances are currently developing positively due to the good economy and wage increases. A mechanism is prescribed under which the contribution rate is lowered if the projected pension insurance reserve exceeds a certain level.

For a gross salary of 3,000 euros per month, the reduction in the contribution rate will result in a reduction of 1.5 euros for the employee. Contributors can also look forward to a slight reduction in health insurance premiums, with the average additional contribution falling by 0.1 points to 1.0 percent. As a result, the average total contribution will fall from 15.7 percent to 15.6 percent. Individual funds may be below or above this level.

The president of the german pension insurance fund, gundula robbach, spoke of a pleasing development for contributors. But pensioners also benefited – the pension increase in july will be significantly higher than the price increase. Pensions were allowed to rise to 1. July increase of around 3 percent in east and west. After 45 years, those with an average income of 1396 euros (west) or 1336 euros (east) receive around 42 or 40 euros more per month, respectively.

In the long term, however, pension finances will deteriorate significantly as the baby boomers reach retirement age. According to the pension insurance report, which was also discussed by the cabinet, the contribution rate could probably rise again to 18.7 euros in 2023. Then it will continue to rise. In 2031, it could be as high as 21.9 percent.

The pre-tax security level – the ratio of pensions to wages – is currently 48.2 percent and will fall below 48 percent after 2024. In 2031, the pension level could fall to 44.6 percent, unless politicians change the course before then. "The decline in the pre-tax security level makes it clear that the statutory pension alone will not be sufficient in the future to continue the standard of living of working life in old age," according to the pension insurance report. Additional provision is necessary for this.

Today, 63 percent of all income in senior households comes from the statutory pension. In 2015, married couples in the old countries had a monthly net income of 2572 euros on average, single men 1593 euros and women 1422 euros. In the new countries, married couples had 2257 euros, single men 1389 euros and women 1370 euros per month.

While the pension fund’s expenditures of around 293 billion euros are covered by revenues in the current year, the gap will widen in the coming years. In 2021, expenditures were allowed to exceed revenues by 4.6 billion euros.

Social welfare associations and trade unions have long criticized the already foreseeable reduction in contribution rates. The social association vdk warned that the financial leeway should be better used to fight poverty among the elderly. "It’s about securing the pension funds in the long term," said vdk president ulrike mascher.

"I call for a waiver of any contribution rate reductions until the way is paved for a pension that secures the standard of living in the long term," said left-wing pension expert matthias W. Birkwald.

Employer president ingo kramer buried that employees and employers were relieved by the reduction in contributions by about 1.2 billion euros per year. "We must not rely on the upswing to keep social security stable," he said. This is another reason why a government capable of action is needed quickly.


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