Questions& answers the basic pension: who benefits and who does not?

The coalition government has agreed on a basic pension. Is it good or bad for Lusatians? An overview:

Pensioners in Lusatia could benefit from the GRundrente

Those who have worked for many years but have always earned little will receive a basic pension from 2021 onwards that is higher than the basic old-age pension. This is what the CDU/CSU and SPD agreed on Sunday. According to Federal Labor Minister Hubertus Heil (SPD), no one has to apply for it. The individual supplement will be calculated by the pension insurance company with the help of the tax offices and paid out automatically from 2021 onwards. Many details are still open.

Who gets the basic pension?

Anyone who has paid contributions for 35 years and receives a pension that is lower or barely higher than the basic old-age pension can hope to receive a basic pension in the future. Contribution years include child-rearing periods, care of dependents and periods of illness. 85 percent of basic pensioners are expected to be women. In the east, proportionately more pensioners will benefit from the supplement than in the west.

How high is the basic pension?

The supplement is calculated individually and can range from a few euros to around 400 euros per month. The calculation is complicated and depends on the self-acquired pension rights and the current life situation. In essence, for the period of 35 years, the earnings points acquired through contributions during this time are revalued. They are decisive for the amount of one’s own pension and thus also for the basic pension. The Federal Ministry of Labor has calculated that a hairdresser with a pension of just under 530 euros can, in the best case, receive a basic pension of just under 935 euros.

The average basic pension is estimated to be between 70 and 80 euros per month. This results from the agreed total expenditure of 1.5 billion euros per year and the number of 1.5 million possible basic pensioners. Therefore, for each person there would be 1.000 euros per year available. But this says nothing about the actual amount of the individual basic pension.

What reduces the basic pension and who does not get it?

Mini-jobbers will not receive the supplement because their pension contributions are below the minimum level specified for the basic pension. If you have other income in addition to the statutory pension, you will not receive the basic pension if it is too high.

In practice, the allowance for married couples of 1.950 Euro per month will be decisive. If a couple together has higher income, everything above 1.950 euros will be credited against the income of the person entitled to the basic pension (usually the woman) and will reduce the basic pension – by what percentage is still open. If the income is correspondingly high, the basic pension does not apply at all. The income test and imputation are intended to prevent the much-cited dentist’s wife with a small pension of her own from receiving a basic pension in addition despite the couple’s high earnings.

Income includes taxable income, the tax-free portion of the state pension and investment income. How endowment policies are included is still an open question.

How much additional income is allowed?

For singles there is an allowance of 1.250 euros a month (for couples 1.950 euros). Thus, a pensioner living alone who is entitled to the basic pension can receive up to 15.000 Euro taxable income to earn in addition. Also an owner-occupied house does not reduce the basic pension.

What will improve for basic security recipients?

Pensioners who rely on the basic pension (on average about 800 euros a month) should also benefit. They should be able to keep up to 212 euros from their own pensions in the future.

Does the basic pension reduce the housing allowance?

The coalition wants to introduce an allowance for housing benefit recipients so that the basic pension does not count in full as income and would reduce the housing benefit accordingly.

What are the reactions in Brandenburg and Saxony??

Scepticism prevails at the Brandenburger Linke. "The direction is right, but this does not get to the root of the basic evil," said Left Party leader Kathrin Dannenberg in Potsdam on Monday. The old-age poverty as a social problem would persist. "Many people in Brandenburg do not have 35 years of contributions due to their broken employment histories."

Minister President Dietmar Woidke (SPD) has welcomed the compromise. "I’m very pleased about that – and especially about 1.5 million pensioners who will receive at least a somewhat higher pension nationwide in the future." East Germans in particular could benefit from this.

Saxony’s SPD state chairman Martin Dulig has welcomed the basic pension compromise of the coalition leaders at the federal level. The basic pension is a "reasonable agreement" and an "important socio-political milestone", said the politician on Monday in Dresden. Now there would be more justice for pensioners, especially in eastern Germany. "In the East, many people have worked particularly long hours, but often have significantly lower pension entitlements due to low wages and more frequent unemployment, and thus only receive money from the basic pension scheme."

The church welfare associations Caritas and Diakonie welcome the agreement reached by the coalition parties in the dispute over the basic pension. "People must be able to rely on the core promise that after decades of paying into the pension insurance, they will receive a security in old age that does justice to their life’s work", said the president of the Catholic German Caritas Association, Peter Neher

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