Basic pension in germany 2021: who gets it, how it is calculated& how high it becomes

 Basic pension in germany 2021: who gets it, how it is calculated& how high it becomes

Overview Basic pension decided: Who gets it, how it is calculated and what it costs

The basic pension will come in 2021. 1.3 million people will benefit from it in the starting year - who will get it and how much. Source: dpa

The basic pension will come in 2021. In the starting year, 1.3 million people will benefit – who gets it and how much.

Berlin The coalition has argued about few projects as much as it has about the basic pension. Now the Bundestag has passed the surcharge on mini pensions with the votes of the coalition factions of the CDU/CSU and SPD against the votes of the AfD and the FDP, with the Greens and the Left abstaining. The Bundesrat has now also approved the law.

In the Bundestag debate, Social Affairs Minister Hubertus Heil (SPD) called the basic pension a central political reform project of the German government. It is not a handout. An overview of the complicated construction of the basic pension and its effects:

What is the aim of the basic pension??

The aim is to help all those people who have worked for years, raised children or cared for relatives – but whose earnings are not high enough to provide an adequate pension. Their life’s work is to be recognized, and they are to be spared the need to go to the social security office. Basic pension received last 556.640 people. But many do not apply for the benefit. Depending on housing costs, the basic pension can amount to about 800 to 900 euros.

Currently, there are 8.98 million old-age and disability pensions below 800 euros, but in many cases this does not mean that those affected would be poor. Many have simply paid into the pension fund for a short time. 4.1 million full-time employees recently received only low wages.

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Who receives the basic pension?

In the starting year 2021 1.3 million people, 70 percent of them women. Namely, people with mini-pensions who have at least 33 years of pension contributions from employment, child-rearing or care work. The supplement is initially to be staggered – after 35 years of contributions, it is to reach the full amount. Basic pensions are also only paid to those with incomes below certain limits.

When will the basic pension be paid??

After the basic pension was introduced on 2. The new legislation, which was passed by the Bundestag on July 1, 2020, is intended to increase the legal entitlement to a basic pension for 1. January 2021 apply. However, the specialist authority is already complaining about the high administrative costs involved in checking new and existing pensioners. As a result, the authorities do not expect to be able to send out the basic pension notices for new pensioners for another year or so – existing pensioners will probably have to wait until the end of 2022 to receive their notices.

What are the income limits?

The full supplement will only be paid to those whose monthly income as a pensioner at maximum of 1250 euros (single person) and 1950 euros (married couples or civil partners) is. Incomes above this limit will become 60 percent counted towards the basic pension. With 1300 euro income of a single person 50 euro would be taken into account to 60 per cent – the basic pension would turn out 30 euro lower.

If the income is more than 1,600 euros or 2,300 euros, it is counted in full as 100 percent of the basic pension supplement. So if a married couple has an income of 2400 euros, for example, the basic pension is reduced by 100 euros.

The income limits for tax incentives for a company pension will also be raised. The income limit increases from monthly 2.200 Euro to about 2.600 euros.

What is taken into account in the income test?

Taxable income, for example from rental income, a pension, or amounts from company or private pension plans, is tested. In addition, there is the tax-free portion of pensions and investment income that is not already included in taxable income. Income-related expenses and expenses for health and long-term care insurance are deducted. Information on taxable income is usually only available for the previous year, so new pensioners may not receive the basic pension in the first year. However, the income test is to be repeated once a year.

How is the basic pension calculated?

In a complicated procedure. Only periods with contributions corresponding to 30 to 80 percent of the annual average income are included in the calculation. Last year, this range was about 972 to 2593 euros gross.

How does the calculation work in practice??

In principle, the earning points used to calculate the pension as a whole are revalued. An average earner receives one such point per year. For each point there is currently 33.05 euros pension in the West and 31.89 euros per month in the East. For the periods with only low pension entitlements that trigger the basic pension, the earning points will be increased: namely, for 35 years to twice the average value of the points earned – but to a maximum of 0.8 points. Then the value is reduced again, by 12.5 percent. The effect of the reduction in the supplement achieved in this way is that more contribution brings more total pension.

What can this mean, for example, for a pension of around 750 euros?

It depends on the case. Example 1: A secretary in the West with 38 years of insurance and two children. Only 26 years are taken into account for the basic pension, because in the other years it only came to contributions that are less than 30 percent of the average wage. In the 26 years, however, it came to 70 percent. The pension is 754 euros – the basic pension supplement is 75 euros. Example 2: A saleswoman in Dresden with 39 years of work at 60 percent of the average wage with no other income gets a pension of 746 euros – and a supplement of 195 euros.

How high are the costs – and how great is the administrative burden?

In the starting year 2021, the basic pension is to cost taxpayers 1.3 billion euros. With 1.3 million recipients, this would mathematically mean an average supplement of around 83 euros a month. One does not have to apply for the basic pension. Data reconciliation for income verification will also work automatically. Pension insurance will still have a lot of work to do.

So it should take about 640 employees a year to check whether people who are already receiving pensions also receive the surcharge. 650 employees are to check foreign income for existing pensioners, which cannot be automatically matched. There are also plans to query the Federal Central Tax Office and credit institutions for the required information on investment income.

How is the basic pension to be financed?

The CDU and CSU had initially proposed introducing a new financial transaction tax to help finance the basic pension. Since the proposal was rejected, the required 1.3 billion euros of the first year will have to be financed from the state budget.

What else is included in the legislative package?

A subsidy for those who have earned too little for basic pensions: Those who paid into the pension fund for 33 years but earned particularly little and need basic benefits will receive an allowance in the basic pension of initially a maximum of 216 euros. In addition, to protect against rising rent costs, the basic pension is prevented from being fully counted towards housing benefit – this allowance is also to be a maximum of 216 euros. The total cost to the federal government for the legislative package will thus rise to 1.9 billion euros in 2025.

Why is the basic pension so controversial??

There is a lot of criticism, especially from employers and trade unions. In view of the largest low-wage sector in Western Europe, a revaluation of low pensions is long overdue, DGB board member Annelie Buntenbach told the Deutsche Presse-Agentur in Berlin. Because low wages are the main cause of poverty in old age. However, the procedure for calculating the basic pension would be highly complicated. Many fewer people would benefit than in the original draft. Buntenbach blamed this on the position of the CDU and CSU.

Basic pension: Labor Minister Heil: Basic pension renews core promise of the welfare state


Basic pension Labor Minister Heil: Basic pension renews core promise of the welfare state

Employer President Ingo Kramer said the basic pension decision creates serious injustice and does not make a targeted contribution against old-age poverty. "What the grand coalition is now deciding to do blurs the line between pensions financed by contributions and needs-based basic benefits."

Strong criticism was also voiced by the business association The Young Entrepreneurs. "Our pension system is a ticking time bomb, and the basic pension shortens the time until the big bang," said federal chairwoman Sarna Roser. "It is irresponsible that more and more burdens are being dumped on the shoulders of contributors and taxpayers, and especially on the shoulders of the younger generation."Measures are necessary, which help purposefully against age poverty.

More: When it comes to pensions, the GroKo is negligently inactive, comments Gregor Waschinski.

  • dpa

Labor market policy Almost 1.1 million people in Germany will receive basic benefits in 2020

Pension policy Payment begins: Basic pension notices will be sent out starting in July

Commentary The pension increase is unfair

Commentary – The chief economist The unconditional basic income is the Nessie of the social policy

Labor market policy Why an unconditional basic income is unaffordable

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  •  Basic pension in germany 2021: who gets it, how it is calculated& how high it becomes

A bad law. One must not continue to abuse the pension fund for socio-political gifts. The principle must finally apply again for pensions must be paid pension contributions. This principle is turned more and more on its head.

Social support must come from other pots and be financed by taxes.

The life of a pensioner is frustrating in Germany. What the medicine with high employment succeeded ends in the poverty of those, which worked for this country. In many cases, the fate is borne by the family. For this life-supporting institution, the families of our society, the discussion about the pension, as it is led today, is very burdensome. From the side of our government, however, only few positive life impulses come for the family. Is it because its members have too little practical experience to understand such a framework, often of 4 generations?

This is a crime against younger generations. Old age poverty is nothing else than age envy!!

Pensioners 60 years ago, 40 years ago or 20 years ago were all worse off than today’s pensioners. The grandparents of my parents could NEVER afford a vacation. They had to look that at the end of the month at all enough to eat was available. The parents of my parents (my grandparents) could afford vacation while they were working, but not anymore when they retired. And my parents are since 1 year in pension and go annually in the vacation.

What I want to say is that pensioners have never had so much money available for leisure and consumption as they do today. Sure there are differences, but if you’ve worked your 40 years or even more, you’ve also contributed to society for 40 years (funding former retirees). People who have done more for their society should also get more. Such a basic pension offers future workers the incentive to work only 2/3 of the time. Notice the vicious circle? Where is this to lead if less and less is worked, but at the same time more and more (pensions) is demanded?.

To represent the situation once figuratively..

The SPD has been sitting for years in a rubber dinghy that is losing air and is heading faster and faster towards a waterfall. The party comrades are all in on it, trying in vain to escape the abyss by unimaginative paddling. But in vain, because all their efforts seem to be ineffective. Instead of changing course and focusing on previous strengths, people prefer to trust the opinion of external consultants and focus on the largest group of voters. Where is it still social, if only short term successes count??
(Okay, the consultation is judged on the short term result, but was that then a good policy that benefits the people?)

Oh yes .
it should be noted: my father, born in 1924, entered working life at the age of 14, was then allowed to spend three of his youthful years from 18 to 21 as cannon fodder during World War II, voluntarily paid the maximum rate into the statutory pension scheme until the age of 65 . and his widow receives 1050,- Euro.

Yes, it is so!
I am of the opinion that the relations are no longer correct.

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