After a zero round for pensioners this year, the repercussions of the Corona crisis are now causing a sharp increase in statutory pensions in the next two years: Seniors in the West can hope for an increase in their salaries by more than 10 percent by July 2023, the seniors to the east there is even a plus of almost 12 percent.

This results from new projections for the annual pension insurance report, the draft of which the Federal Ministry of Labor has now completed and submitted to the other departments for internal government approval.

Dietrich Creutzburg

Business correspondent in Berlin.

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The main reason for the record-breaking increases that are now in prospect is the recovery of the labor market and wage developments after the severe dampening of the Corona recession. Because the two variables are central factors for calculating the annual pension increases. This year, on the other hand, pensions should actually have fallen due to the decline in the number of employees and wages in 2020. A special statutory rule, the pension guarantee, prohibits cuts and, in the worst case, allows zero rounds.

Specifically, the new projections assume that senior citizens in the west will receive 5.2 percent more pensions on July 1, 2022, and senior citizens in the east as much as 5.95 percent.

Against the background of the foreseeable economic trend, this had been expected for a long time on this scale.

All the more astonishing, however, is the forecast that holds out the prospect of similar growth for the more than 20 million retirees in 2023.

There could be another zero round in 2024

Specifically, in July 2023 there would be a further increase of 4.9 percent in the west and 5.7 percent in the east. However, all data are still forecast values. The statistical data that the government uses to calculate the actual amount of the pension adjustments as of July 1 is always only available in March. With the current values, it would look like this for seniors with a pension of 1000 euros, for example: The sum of the two annual levels gives them 102 euros more per month in the west and 116 euros more in the east.

In addition to the actual wage and employment development, there are also special technical effects that intensify the fluctuations after the crisis. They also mean that the strong increases in the next two years will then be partially corrected with the subsequent pension round: The ministry's draft even assumes another zero round in the west and a small plus of 0.7 percent in the east for 2024 - although wages are expected to continue to rise.

This is due to the fact that pensions should ultimately follow the development of contributory wages.

However, since this specific data is only available with an even greater delay, the annual increase is always determined first with aggregated wage data from the national accounts - and automatically readjusted in the following year if necessary.

While the two data series otherwise differ only slightly, special effects from the coronavirus are now causing greater deviations and increasing the need for correction.

Above all, short-time working allowance is not recorded as a wage in the national accounts statistics, although pension contributions are to be paid on it.

As a result, this mechanism will reinforce the pension increase in 2023 and then automatically offset this again in 2024.

Increases provide political discussion

Even without this pension mathematics, the upcoming sharp increases provide political discussion material - also for the coalition talks of the SPD, Greens and FDP.

Because employers and liberal economists now see their criticism of a controversial decision by the black-red coalition strengthened and demand that the "catching-up factor" that was abolished in 2018 be reinstated.

"The pensions should not rise faster than the wages", summarized Alexander Gunkel, representative of the employers' side at the top of the German pension insurance, this view on Wednesday.

Otherwise the long-term stabilization of pension finances will be made more difficult.

The catch-up factor used to be a compensation for the pension guarantee in crises: If a mathematically necessary reduction had failed, this was offset against later pension increases;

otherwise retirees would in a sense become crisis profiteers.

If the new government should use the catch-up factor again, the pension increase for 2022 would be halved to a good 2.5 percent.

Earlier on Monday, Lars Feld, who used to do business, had pleaded for this step.

The union leader of the pension insurance, Anja Piel, advised against short-term interventions in the pension calculation.