Federal Cabinet: The largest increase in pensions in decades

The federal government wants to launch its planned July 1 pension increase today — according to Labor Secretary Hill, it’s the highest in 30 years. Other changes to pension provisions are also planned.

Pensions in Germany are set to rise on July 1. The Federal Cabinet launches the planned increase today. In the West, pensions will increase by 5.35 percent after the zero round last year, in the East by 6.12 percent after a slight increase in 2021. A monthly pension of 1,000 euros, which depends only on Western contributions, then increases by 53 euros well, It is a high pension equal to the eastern contributions of 61 euros. “This is the largest pension increase in nearly 30 years,” said Federal Labor Secretary Hubertus Hill (SPD).

The catch-up factor is to come into play again

Its bill also states that about three million disabled retirees will receive up to 7.5 percent of the extra money starting in 2024. In addition, the so-called compensation factor, which has a dampening effect on pension increases, must be reinstated. In case of lower wages, pension security prevents pensions from lowering as well. When wages rise again, the catch-up factor is meant to compensate mathematically for this prevented drop in pensions – so the pension increases are smaller.

Pensions are adjusted on July 1 of each year according to wage developments. In the worst case, zero rounds occur.