Germany announces biggest pension hike in decades

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Germany announces biggest pension hike in decades
A woman takes money from her purse. Photo: picture alliance/dpa/CLARK

The German government confirmed on Wednesday that it was hiking the state pension by up to 6 percent, but trade unions warned that the increase would immediately be eaten up by inflation.


German pensioners are about to receive the highest increase to their payments in years.

Pensioners in west Germany are to receive the largest single hike in their payments since 1983, with the government announcing a 5.35 percent increase that will come into effect on July 1st.

In east Germany, where the pension is calculated differently to compensate for lower wages, pensioners will get an even bigger higher hike of 6.12 percent, the biggest such increase in the former East since 1994.

"The statutory pension is working very well despite the challenges we are facing right now," Labour Minister Hubertus Heil said on Wednesday.

As a result of the increase, a monthly pension of €1,000 based only on west German contributions will rise by €53 on July 1st, while a pension of the same amount in the east will rise by around €61. 

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But social welfare associations and unions said that Germany's 21 million pensioners are unlikely to benefit from the increase due to the current high level of inflation. 

"The comparatively good pension increase this year will be eaten up completely by rising prices," said Anja Piel from the German Federation of Trade Unions (DGB).


"Pensioners are massively affected by inflation-related cost increases," agreed Ulrich Schneider, head of the Paritätischer Gesamtverband. He added that the fact that there had been no rise in pensions in 2021 made the increase seem more impressive than it actually is.

Pensions are adjusted every year on July 1st, depending on wage trends. If wages fall, a legal guarantee prevents the retirement benefit from also falling.

Last year there were no pension increases due to the fact that wages flatlined. 

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