Retirement benefits
Pension year 2024: increasing salaries and uncertain prospects
Pensioners will soon receive higher salaries – but the prospects remain uncertain. photo
© Marijan Murat/dpa
Pensioners will receive a few euros more transferred to their accounts from summer onwards. But longer-term forecasts are uncertain. The pension president warns of the possible consequences of the austerity measures.
One thing seems to be clear about the 2024 pension, despite the planned cuts The federal budget’s social budget is secure: around 21.5 million pensioners can look forward to increasing salaries. But there are also uncertainties and warnings – an overview.
Higher pensions
The pension increase nationwide in July is likely to be around 3.5 percent. The main reason is the positive wage development. With a pension of 1000 euros, the increase should be around 35 euros. Exactly how high the increase will be will be determined in the spring based on the exact data that will then be determined. Pension increases are also expected for the coming years – of 2.6 to 3 percent, as the pension insurance company had already predicted in the fall.
Stable contribution rate
The contribution rate for statutory pension insurance will remain stable at 18.6 percent in 2024. According to model calculations presented by the pension insurance company in the fall, the rate should remain unchanged until 2027. Then the retirement of the baby boomers will become more and more noticeable. By 2035, the contribution rate could rise to 21.1 percent.
Effects of low subsidies
As part of savings in the federal budget, the government wants to reduce the federal subsidy for pension insurance by 600 million euros in 2024. According to pension insurance, the contribution rate could therefore rise earlier than previously thought. A reduction in subsidies would result in a faster reduction in the pension fund’s reserve, the so-called sustainability reserve: “In order to replenish the sustainability reserve, the pension insurance contribution rate must be increased earlier than previously planned.” The president of the pension insurance company, Gundula Roßbach, therefore criticized the planned further reduction in subsidies: “This is not reliable financing.”
Regular age limit increases
The regular age limit will rise to 66 at the beginning of the year. This applies to insured persons who were born in 1958. For those born later, the entry age continues to increase in 2-month increments. The regular age limit of 67 will be reached in 2031.
Age limit for “pension from 63” increases
The age limit also increases for the zero-deduction pension for those insured for at least 45 years (known as “pension from 63”) – namely to 64 years and 4 months for those born in 1960. For those born later, the entry age will increase to 65 by 2029.
Discount on pensions for those who have been insured for a long time
Anyone who has been insured for at least 35 years can take a retirement pension from the age of 63 – but with deductions of 0.3 percent per month that the pension is claimed before the regular retirement age. With the gradual increase in the regular retirement age to 67 by 2031, the deduction for claiming this pension as early as possible will also increase. For insured people born in 1961, the deduction for the earliest possible start of retirement is 63 years old. For insured people born in 1960, the deduction was a maximum of 12 percent.
Higher tax share for new pensioners
Anyone retiring in 2024 will have to pay tax on a higher proportion of their pension. From January 2024, the taxable pension share will increase from 83 to 84 percent – only 16 percent of the first full gross annual pension remains tax-free.
Contribution assessment limit
The contribution assessment limit for pension insurance will rise from 7,300 to 7,550 euros per month in the old federal states in 2024. In the new federal states it increases from 7,100 to 7,450 euros. Up to this amount, employment income is taken into account when calculating the pension contribution – no contributions are due for income above this amount. High earners also face higher social security contributions, as statutory pension and unemployment insurance contributions of up to 7,550 euros per month are now due in the west and 7,450 euros in the east.
Pension reform
How the pension will continue in the long term, whether the security of the salary will be maintained in relation to the wages and whether the pension contribution can be stabilized in the long term depends not least on a possible pension reform. Despite announcements, the traffic light government has not yet been able to agree on a draft for the start of a legislative process. The plan is to permanently secure an existing holding line for the pension level of 48 percent in relation to wages. This so-called holding line currently applies to the security level of the statutory pension until 2025. At the same time, the long-term development of the contribution rate is to be stabilized by building up a capital stock. But the Greens in particular are reportedly opposed to such a capital stock worth billions because the capital markets are too uncertain.