Labor Minister Heil expects pensions to rise above the inflation rate

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Hubertus Heil: Promises a new pension package in a few weeks

Photo: Political Moments / IMAGO

Good news for pensioners: Federal Labor Minister Hubertus Heil believes a relatively larger increase in payments is possible again this year. Initial estimates made the federal government "confident that pensions will rise faster than inflation again on July 1st," the SPD politician told the newspapers of the Funke media group.

The pension increase last year was “not small,” but remained below the inflation rate, said Heil. “Fortunately, inflation is now falling significantly and there have been decent wage agreements.”

Last year, pensions rose by 5.86 percent in the east and by 4.39 percent in the west. However, consumer prices in Germany increased by an average of 5.9 percent in 2023 compared to 2022. In January 2024, the inflation rate was 2.9 percent.

Pension levels should be maintained

Heil also does not initially expect any increase in pension contributions. Employment in Germany is “at a record level,” said Heil. The contribution rate has therefore been stable at 18.6 percent since 2018 and will “remain stable for even longer.”

The pension reform planned by the federal government should prevent significant increases in the future. Federal Finance Minister Christian Lindner (FDP) and he are "very far along" with the reform and will present the new pension package "in a few weeks," said Heil.

It's about "securing the pension level in the long term." Without reform, pensions would “fall significantly” in the coming years. A pension level of at least 48 percent is currently legally guaranteed by 2025, and the traffic light coalition wants to maintain this level - without further raising the statutory retirement age.

In the long term, politicians are nevertheless confronted with a problem: due to the aging of society, there will be too many recipients and too few contributors to pensions in the long term. There are various approaches to ensure that this pay-as-you-go system does not get further into trouble. Most recently, the Ifo Institute proposed linking the retirement age to increasing life expectancy - and increasing pensions to inflation.

apr/AFP