Ifo study: Pensioners with income from the East at a disadvantage in future
According to the Ifo Institute in Dresden, the equalization of pension calculations in the east and west means that contributors in eastern Germany are worse off. Eastern incomes were previously valued higher when calculating pensions so that lower wages in the east did not also lead to lower pension entitlements, the institute announced on Thursday. This distinction has been gradually phased out since 2018.
According to the calculations, the higher valuation was 13.4 percent in 2018. "The consequence of the abolition is that contributions in the East are now worth less than before, as the average income in the East is still significantly lower than in the West," explained Professor Joachim Ragnitz. The gap in average income is still 17 percent. This will translate into lower pensions for the majority of employees in the future.
According to the calculations, in 2018 an employee with an average income in the east acquired a pension entitlement of 37.60 euros per month for each pension point. This is now only 31.51 euros.
Due to the abolition of the higher valuation of incomes in pension calculations, pensioners in eastern Germany will now receive less for each pension point, resulting in lower pensions overall. As a consequence, the pension disadvantage for pensioners with income from the east will persist and potentially widen in the future.
Source: www.dpa.com
