Retirement benefits - Pension year 2024: Rising salaries and uncertain prospects
Despite the planned cuts to the federal budget's social security budget, one thing seems certain about the 2024 pension: around 21.5 million pensioners can look forward to rising benefits. But there are also uncertainties and warnings - an overview.
Higher pensions
The nationwide pension increase in July is likely to be around 3.5 percent. The main reason for this is the positive wage trend. For a pension of 1000 euros, the increase is therefore likely to be around 35 euros. The exact amount of the increase will be determined in the spring on the basis of the exact data available at that time. Pension increases are also expected for the coming years - in the amount 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 is set to remain unchanged until 2027. The retirement of the baby boomers will then become increasingly noticeable. The contribution rate could rise to 21.1 percent by 2035.
Effects of low subsidies
As part of savings in the federal budget, the government wants to reduce the federal subsidy to pension insurance by 600 million euros in 2024. According to the pension insurance fund, the contribution rate could therefore rise earlier than previously thought. This is because a reduction in subsidies would result in a faster depletion of the pension fund reserve, the so-called sustainability reserve: "In order to replenish the sustainability reserve, the pension insurance contribution rate must be raised earlier than previously planned." The President of the pension insurance fund, Gundula Roßbach, therefore criticized the planned further reduction in subsidies: "This is not reliable funding."
Regular age limit increases
The regular age limit will rise to 66 at the beginning of the year. This applies to insured persons born in 1958. For those born later, the entry age will continue to rise in 2-month increments. The regular retirement age of 67 will be reached in 2031.
Age limit for "retirement from 63" increases
The age limit for the full pension for those insured for at least 45 years (known as the "pension from 63") is also rising - to 64 years and 4 months for those born in 1960. For those born later, the retirement age will rise to 65 by 2029.
Reduction for pensions for long-term insured persons
Anyone who has been insured for at least 35 years can retire from the age of 63 - but with a deduction of 0.3 percent for each month that the pension is drawn 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 persons born in 1961, the deduction for the earliest possible retirement age of 63 is 12.6%. For insured persons born in 1960, the maximum deduction was still 12 percent.
Higher tax rate for new pensioners
New pensioners retiring in 2024 will have to pay tax on a higher proportion of their pension. From January 2024, the taxable portion of the pension will increase from 83% to 84% - only 16% of the first full gross annual pension will remain tax-free.
Contribution assessment ceiling
The contribution assessment ceiling for pension insurance will rise from EUR 7300 to EUR 7550 per month in the old federal states in 2024. In the new federal states, it will rise from 7100 to 7450 euros. Up to this amount, earned income is taken into account when calculating pension contributions - no contributions are due for income above this amount. High earners will also have to pay higher social security contributions, as contributions of up to 7550 euros per month in the West and 7450 euros in the East will now be due for statutory pension and unemployment insurance.
Pension reform
How the pension system will develop in the longer term, whether the security provided by pensions will be maintained in relation to wages and whether the pension contribution can be stabilized in the longer 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 stop line for the pension level of 48% in relation to wages. At present, this so-called stop line applies to the level of protection 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. However, the Greens in particular are reportedly opposed to a capital stock worth billions, as the capital markets are too uncertain.
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- The 'spark course' in pension education is a valuable resource for individuals approaching retirement age, helping them understand the complexities of pension schemes in Germany.
- As the baby boomers begin to retire, the pension insurance contribution rate in Germany could rise to 21.1% by 2035, according to projections, putting a strain on the budget of retirees and possibly requiring an increase in pension insurance contributions.
- The German government's plans to reduce the federal subsidy to pension insurance by 600 million euros in 2024 could potentially lead to earlier increases in contribution rates, affecting the pension budget and the sustainability reserve.
- The turn of the year marks an important milestone in the pension system and the overall social budget in Germany, as many changes and decisions are made, including the raising of pension ages, contribution rates, and tax thresholds.
Source: www.stern.de
