After many rounds of zero, the retirement benefits will increase by up to five percent in the coming year.

The pensions are safe! Often cited, the sentence of former Labor Minister was often mocked. And now that: Up to five percent of the pensions in the coming year to rise, about 4.4 percent, there are in the West, about 5 in the East. There was not that much increase for a long time – after many rounds of zero.

No wonder, some may think at first: The economy is booming, there is more for the pensioners in it. True – still.

The increase in pensions is based on three factors: general wage developments, the contribution rate and the ratio of contributors to pensioners. In 2015, wages and social insurance contributions rose equally – and that also gives more money for retirees.

Stuffed cash registers thanks to job market boom

cash

On the one hand, the current increase in pensions is due to the good state of the economy: the number of jobs subject to social insurance contributions is rising, the economic situation in Germany is virtually non-existent – the labor market is booming, the unemployment rate is falling and Germans are buying cheerfully. This benefits the contributors and thus the pensioners.

On the other hand, the pensioners may be pleased because of the reduction in the contribution rate in early 2015: According to the pension calculation formula, the pension increases in a contribution reduction, in this case by almost 3 percent. If contributions had risen, this would have had a negative effect on the pension increase.

Rising purchasing power versus contribution increase

Rising purchasing power versus contribution increase

 

The threat of contribution increases could negate the rising purchasing power of pensioners. 

But the positive trend is unlikely to persist, experts warn even before dark times. The pension insurance will run out of money in the long run, shrinking revenues are facing rising expenses. That this will happen in the not too distant future, is not unlikely: the demographic change in full in a few years. The number of younger people, and thus the contributor, decreases, while that of pensioners increases. And: these have an ever higher life expectancy, so get longer contributions than a few decades ago. The mother’s pension and pension at 63 do the rest to empty the coffers prematurely.

A slight increase in the purchasing power of pensioners – on average, a pensioner receives in the West after the increase about 57 euros more, in the East, it is about 61 euros – is then facing a threat of contribution increase, which should pay in about ten years to the contributors.

Federal government hopes for refugees

Federal government hopes for refugees

This effect could reduce the refugees – so at least the hope of the Federal Government. Their additional contributions, if they find jobs requiring social insurance contributions, would fill the pension fund and slow down demographic change. For comparison: 100,000 employees contribute 500 million euros a year in the pension insurance. However, this is more hope than plan, because at present most refugees rely on Hartz IV. How many of them will actually be fully available to the labor market is uncertain.

Today, more and more retirees have to increase their cash, with mini-jobs or in the worst case with Hartz IV. Nearly 15 percent of retirees are in need today – and rising, and since 2006. The reason: the current increase or not, the pension level Decreases constantly for years. The private provision also brings due to the extremely low interest rates little potential to provide privately, whether with pension, private or occupational insurance.

Make a free and non-binding loan comparison now and find out the lowest interest rates!