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PENSIONS

Everything that changes in Germany in July 2020

From higher wages to lower taxes, there's a lot changing in Germany as of Wednesday - and not all of it coronavirus related.

Everything that changes in Germany in July 2020
Clocks in Düsseldorf's Volkspark. Photo: DPA

More summer travel options

The worldwide travel warning is being lifted for all EU member states as of Wednesday, although a travel warning remains in place for 130 countries until at least August 31st. 

That excludes, however, a few popular holiday destinations such as Egypt or the Maldives. 

On Wednesday, travellers from 15 countries – including Australia and Canada – will also be allowed to travel to Germany and the EU again after being put on a “safe list.”

READ ALSO: EU agrees to reopen borders to 15 countries but excludes US from safe travel list

Tenant protection ending

As of July 1st, the temporary special protection against termination of tenancy for tenants (Kündigungsschutz) due to the corona crisis will no longer be valid. 

Berlin graffiti calling for rents to come down. Photo: DPA

For the period from April 1st to June 30th, tenants and leaseholders could not be kicked out for failing to pay rent due to the coronavirus pandemic. However, the rent is still due for this period, and interest on arrears may also be incurred. 

However, a dispute has flared up within the grand coalition over the continuation of the Corona protection against dismissal. The left-leaning Social Democrats (SPD) are demanding an extension, whereas Merkel’s centre right CDU and its Bavarian sister party CSU are against it.

Protests also flared up around the country in response on Wednesday. 

More value for your euro

As part of an economic rescue package Germany launched, the government is lowering the VAT (value added tax) for half a year from 19 to 16 percent. For everyday items such as groceries, it’s sinking from 7 to 5 percent. 

Here’s a look at how much you can look to save on products in furniture stores, the supermarket or when buying a new car.

READ ALSO: What you should know about Germany's VAT cut

Pensions going up

The approximately 21 million pensioners in Germany will receive noticeably more money starting on July 1st. Due to the annual pension adjustment, pensions will rise by 3.45 percent in western Germany and by 4.20 percent in eastern Germany.

The pensions in the east are thus gradually creeping up to the levels in the west. However, not all pensioners will receive the pension increase on the same date.

Coronavirus cases in pets must also be registered

Current knowledge tells us that it’s rare for certain pets and zoo animals to be infected with coronavirus. But that hasn’t stopped some isolated incidents from being reported around the world.

In order to be able to research the potential connection more thoroughly, there will soon be an obligation to report cases of the virus in animals in Germany.

According to Federal Agriculture Minister Julia Klöckner of Merkel’s centre-right Christian Democrats (CDU), a regulation on this could be passed in the Bundesrat on July 3rd. 

However, the owners of the approximately 31 million pets in Germany will not be obliged to have their dogs or cats tested. There is no evidence so far that people become infected with the virus from their pets.

Higher wages for nurses and care workers

To better recognise hospital staff for the tremendous effort they have put in over the last months, Germany will be raising the minimum wage for nurses and care workers to €15 an hour. By 2022, that amount is slated to increase to €15.40 per hour.

In addition to Germany’s legal minimum holiday requirement of 20 days per year, care workers are also slated to receive an additional five days of holiday this year, and six days in the coming year. 

More corona testing at slaughterhouses

Following the incidents at Tönnies slaughterhouse, the meat industry in North Rhine-Westphalia will in future have to have employees tested for the coronavirus at least twice a week at their own expense.

The entrance to Tönnies in Gütersloh, North Rhine-Westphalia. Photo: DPA

The new requirement will apply to slaughterhouses, cutting plants and meat-processing companies with more than 100 employees as of July 1st, according to the State Ministry of Labor and Health in Düsseldorf.

READ ALSO: What you need to know about German meat plant outbreak

Germany takes over EU presidency

From Wednesday until the last day of the year, Germany is officially taking over the EU presidency. Of course, one of the main areas of work is already becoming apparent: the coronavirus crisis. 

Germany's Federal Cabinet has prepared a programme for this under the motto “Together. Making Europe strong again”. 

To put words into action, the German government has already submitted a proposal for a massive €750 billion aid package, of which €500 billion are to flow to the EU states as grants and the rest as loans.

Other big areas of focus will be resuming negotiations about Brexit, as the UK will officially leave the EU at the end of the year, climate chains and international affairs, particularly with China. 

READ ALSO: Merkel's legacy at stake as Germany takes EU reins

 

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For members

EUROPEAN UNION

Pensions in the EU: What you need to know if you’re moving country

Have you ever wondered what to do with your private pension plan when moving to another European country?

Pensions in the EU: What you need to know if you're moving country

This question will probably have caused some headaches. Fortunately a new private pension product meant to make things easier should soon become available under a new EU regulation that came into effect this week. 

The new pan-European personal pension product (PEPP) will allow savers to take their private pension with them if they move within the European Union.

EU rules so far allowed the aggregation of state pensions and the possibility to carry across borders occupational pensions, which are paid by employers. But the market of private pensions remained fragmented.

The new product is expected to benefit especially young people, who tend to move more frequently across borders, and the self-employed, who might not be covered by other pension schemes. 

According to a survey conducted in 16 countries by Insurance Europe, the organisation representing insurers in Brussels, 38 percent of Europeans do not save for retirement, with a proportion as high as 60 percent in Finland, 57 percent in Spain, 56 percent in France and 55 percent in Italy. 

The groups least likely to have a pension plan are women (42% versus 34% of men), unemployed people (67%), self-employed and part-time workers in the private sector (38%), divorced and singles (44% and 43% respectively), and 18-35 year olds (40%).

“As a complement to public pensions, PEPP caters for the needs of today’s younger generation and allows people to better plan and make provisions for the future,” EU Commissioner for Financial Services Mairead McGuinness said on March 22nd, when new EU rules came into effect. 

The scheme will also allow savers to sign up to a personal pension plan offered by a provider based in another EU country.

Who can sign up?

Under the EU regulation, anyone can sign up to a pan-European personal pension, regardless of their nationality or employment status. 

The scheme is open to people who are employed part-time or full-time, self-employed, in any form of “modern employment”, unemployed or in education. 

The condition is that they are resident in a country of the European Union, Norway, Iceland or Liechtenstein (the European Economic Area). The PEPP will not be available outside these countries, for instance in Switzerland. 

How does it work?

PEPP providers can offer a maximum of six investment options, including a basic one that is low-risk and safeguards the amount invested. The basic PEPP is the default option. Its fees are capped at 1 percent of the accumulated capital per year.

People who move to another EU country can continue to contribute to the same PEPP. Whenever a consumer changes the country of residence, the provider will open a new sub-account for that country. If the provider cannot offer such option, savers have the right to switch provider free of charge.  

As pension products are taxed differently in each state, the applicable taxation will be that of the country of residence and possible tax incentives will only apply to the relevant sub-account. 

Savers who move residence outside the EU cannot continue saving on their PEPP, but they can resume contributions if they return. They would also need to ask advice about the consequences of the move on the way their savings are taxed. 

Pensions can then be paid out in a different location from where the product was purchased. 

Where to start?

Pan-European personal pension products can be offered by authorised banks, insurance companies, pension funds and wealth management firms. 

They are regulated products that can be sold to consumers only after being approved by supervisory authorities. 

As the legislation came into effect this week, only now eligible providers can submit the application for the authorisation of their products. National authorities have then three months to make a decision. So it will still take some time before PEPPs become available on the market. 

When this will happen, the products and their features will be listed in the public register of the European Insurance and Occupational Pensions Authority (EIOPA). 

For more information:

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp/consumer-oriented-faqs-pan_en 

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en 

This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK. 

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