Billion surplus in the pension fund – but many need basic security in old age

Thanks to a billion surplus in the pension fund, the pension is stable, pensioners in the east could even get 4.2 percent more, announced the president of the German pension insurance. While this is well below the rate of inflation, poverty in old age has risen recently.

Thanks to a full pension fund, the approximately 21 million pensioners in Germany can count on increasing payments in the coming years. That said the President of the German pension insurance, Gundula Roßbach, the picture on sunday.

The billions surplus of the pension fund is possible because the pension is linked to wage developments and the labor market is doing well despite the mood of crisis, companies are even urgently looking for employees, she justified the windfall. According to Roßbach, the income has increased more than expected.

“Income is increasing, last year there was even a surplus of 3.4 billion euros – we didn’t expect that.”

This should have an impact on the annual pension adjustment. From July there could probably be around 3.5 percent more in the west and around 4.2 percent in the east, the exact decision is still pending.

According to Roßbach, the pension is stable and will remain so. Whether the pension insurance at the end of the year manages to achieve a surplus like last year also depends on how the wage agreements turned out. But Roßbach is optimistic, since the cash position looks good and previous collective bargaining agreements suggested a pension surcharge.

At least until 2026, the contributions amounting to 18.6 percent of the gross wage should not increase. “After that, the contributions could rise – that also depends on what the pension package will look like, which politicians want to launch this year,” said Roßbach.

While Federal Labor Minister Hubertus Heil also praised the developments, due to disagreements there has not yet been a concrete decision to enact the traffic light coalition’s plans in a law, according to which the pension level should be raised to at least 48 percent of the average wage. Finance Minister Christian Lindner (FDP) relies on the capital markets, which should secure stock rents from the mid-2030s.

In addition, despite the apparently bubbling pension fund, many people are left behind in old age or are responsible for their own income. According to the Federal Statistical Office, the labor force participation of 60 to 64 year olds has increased more than in any other age group. Accordingly, in the last ten years, the proportion has increased from 44 percent (2011) to 61 percent (2021). Even beyond the increased retirement age, the proportion of those who work has increased from 10 to 17 percent over the same period.

It is particularly difficult for women to make a living in old age: After 40 years of full-time employment, every third pension for them is less than 1,000 euros. In September last year, figures from the Federal Statistical Office also showed that twelve percent more pensioners in Germany applied for basic security in old age than in the previous year.

“These numbers represent the misery that is taking place in Germany. Inflation and high energy prices are overwhelming for people who have to make do with a small pension. The federal government must finally fight poverty in old age. More and more pensioners don’t know what to do. They sit in their apartment at a cold temperature of twelve degrees and at the end of the month they only eat toast because they don’t have enough money for more,” explained Verena Bentele, the president of the VdK social association. She added:

“But the figures only show the tip of the iceberg: 70 percent of those entitled do not apply for any basic security in old age – either because they do not know what the benefit is or because the application process is too shameful. The reality is much more dramatic than these figures show.”

more on the subject – Poverty in old age: Germany is not a good country for pensioners