Although people in Germany are getting older on average, employees do not have to expect higher social security contributions for their pension for the time being. According to the current projections, the contribution rate will remain “stable at 18.6 percent until 2026,” said the Federal Chairwoman of the German Pension Insurance (DRV), Anja Piel, on Thursday at the internal federal representative meeting of the DRV in Travemünde. Last year, the DRV still assumed that the contribution rate for employees would have to be increased in 2025.
It would be a further burden for employees due to non-wage labor costs: contributions to long-term care insurance are already increasing as of July 1 of this year, and higher rates for health insurance have been announced for the coming year.
The fact that things are going relatively well in the pension insurance system has to do with the good situation on the labor market. According to Piel, dependent employees paid in 5.5 percent more money last year, and this year the pension fund also recorded an increase of 5.4 percent by the end of May. The labor market has so far withstood the economic shocks caused by Corona, the Ukraine war and the energy crisis, and the number of employees subject to social security contributions continues to grow. However, this could change in the coming years when the baby boomers born between the late 1950s and 1970 retire and significantly more retirees will have to be supported by significantly fewer workers. It is all the more remarkable that the contribution rate is to remain stable for the time being.
Basic pension helps mostly women
Piel also presented a balance of the basic pension. Accordingly, the surcharge mainly helps women, they make up more than three quarters (77 percent) of the recipients. Since the summer of 2021, the basic pension has been paid to people who have paid contributions to the pension fund for at least 33 years, but have only earned little. The supplement itself is also higher for women. Their pension increased by an average of 8.2 percent, that of men by only 5.7 percent. According to Piel, a total of 1.1 million pensioners benefited from the basic pension, which means that they received an average of 86 euros more per month than with their previous pension.
The surcharge is paid much more frequently in eastern Germany than in western Germany. In the new federal states he increased the pension of 7.1 percent of all retirees, in the west it was 4.6 percent.
The basic pension was introduced under the grand coalition to improve the situation of people who had paid into the pension fund for decades but only received a meager pension because of low income. The Union had insisted on an examination of income and need during the negotiations, it should not flow to the wealthy or to people whose partners have high incomes, it said at the time. Therefore, the income of applicants as well as that of the spouses is checked.
According to DRV boss Piel, however, this entails an enormous administrative burden. According to her, the costs of implementing the law eat up almost a fifth of the total aid payment, namely 200 million of 1.1 billion euros. “For comparison: otherwise we get by with less than 1.5 percent administrative costs in pension insurance,” said Piel. She called on lawmakers to simplify the rules.