Left: Equalization of the pension system is a "pension cut in the East"
According to the Left Party, the harmonization of the pension system three decades after German reunification brings disadvantages for East Germany. "The bottom line is a de facto pension cut in the east," Left Party MP Sören Pellmann told the German Press Agency. He was referring to an answer from the federal government on the financial consequences of the abolition of a special clause in the east, which was used to calculate income for pensions at a higher rate.
Since mid-2023, the so-called pension value in East and West has been the same for the first time. This means that people with the same income will earn the same pension entitlement everywhere. At the same time, the so-called revaluation factor, which was intended to compensate for the lower average wages in the East, will be abolished in 2025.
Pellmann has now asked the Ministry of Social Affairs what this means. With this special factor, for example, an income of 36,000 euros per year in the east in 2018 was extrapolated to 40,820 euros for pensions. From 2025, after the removal of the revaluation factor in the pension calculation, only the 36,000 euros will be taken into account.
The Left Party MP concluded: "The reduction of the conversion factor will cost East German employees thousands of euros a year for their pension. The fact that wages in the east are no longer being revalued does more harm than good by equalizing pensions." This is because there is still a "structural wage gap" of around 20 percent between East and West. Pellmann is therefore calling for the conversion factor to be retained until wages have been equalized.
The Ifo Institute in Dresden recently made a similar calculation. Because the average income in the East is lower, "the contributions in the East are now worth less than before", the institute wrote at the beginning of November. In a fact check, the German Pension Insurance, on the other hand, assessed it as false that contributions in the East are now worth less than before. Wage and salary differences exist not only between the West and East, but also regionally in the so-called old federal states.
Calculating pensions is complex because average and benchmark figures are usually given. However, the actual pension is individual and depends on your own income and the length of time you have been paying in.
The harmonization of the pension system has led to a "de facto pension cut in the east," as stated by Left Party MP Sören Pellmann. According to Pellmann, the removal of the revaluation factor in 2025 will result in East German employees losing thousands of euros annually for their pensions.
Source: www.dpa.com
