After retirement, their monthly benefit is often no higher than that of those who did not pay pension contributions but lived on social benefits. As Deutsche Welle notes, the ruling coalitions in Germany have been trying to eliminate this obvious injustice since 2009.<\/p>
Minimum pension in Germany: everything depends on length of service<\/p>
In Europe, there are various pension models, for example, the minimum pension, which is quite familiar to our readers. In Germany, there is no minimum pension in the usual sense. The benchmark is the amount of 512 euros – a pensioner who earned a salary at the minimum wage level can count on this. But, in principle, the size of the pension is determined by the amount of pension contributions accumulated over the years of work: the higher they are, the higher the pension.<\/p>
The principle is simple but not ideal: today, over half a million elderly Germans find themselves in a situation where they cannot do without state assistance. The number of such pensioners has doubled since 2003, according to the Federal Statistical Office Destatis (then there were only 257,000).<\/p>
Since when have the elderly in Germany not had enough to live on? <\/strong><\/p>
If a person's total income does not exceed 865 euros per month, the Association of German Pension Insurance Funds Deutsche Rentenversicherung recommends applying for social assistance. In Germany, it is called basic material security (Grundsicherung).<\/p>
The benefit covers expenses for rent and heating, clothing, and health insurance. The amount of the benefit may vary depending on the specific case, and it also differs in different federal states: for example, rent is more expensive in some places, and so on.<\/p>
In Germany, there is a consensus that the model of such social assistance is not suitable for pensioners. If only because they have earned a pension "as a sign of respect for their work," as politicians say. Secondly, it is believed that at least half a million more people could already apply for state assistance today but do not do so out of shame and ignorance of their rights.<\/p>
Pension and the issue of fairness in Germany<\/p>
In the debate about the basic pension, calls for fairness played an important role. Some call it unfair that the introduction of a basic pension will increase the burden on the young, who are currently paying pension contributions; while others consider it unfair that the basic pension in its current form will go to many who do not need it. A classic example is the "dentist's wife": she may have earned little herself, helping in her husband's doctor's office, but, they say, his large pension will be enough for both of them.<\/p>
In public discussions in Germany, the example of the neighboring Dutch was often cited as more successful. In the Netherlands, a basic pension exists, and many German pensioners look enviously at its amount – 1,200 euros monthly with the sole condition that the applicant must have lived in the country for 50 years. If the pensioner also paid contributions to the pension fund, the pension will be higher.<\/p>
At the same time, in Germany, 1,200 euros is not the minimum but the average pension level, after possible tax payments (yes, some pensions are also subject to taxes) and deductions for health insurance and long-term care insurance.<\/p>
Basic pension: how much and for whom<\/p>
To guarantee a decent old age and also to relieve needy pensioners of unpleasant visits to social services and applications for assistance, the state has considered ways to solve the problem. One of them is the basic pension. The German coalition government, consisting of the conservative bloc of the Christian Democratic Union (CDU) of Chancellor Angela Merkel and the Bavarian Christian Social Union (CSU), as well as the Social Democratic Party (SPD), promised after the 2017 elections to agree on a pension reform.<\/p>
The negotiations dragged on, but on November 10, the parties announced a compromise. The main points of the reform: the basic pension should be at least 10 percent higher than the existing social benefit. Years spent on parental leave and time spent caring for relatives will be counted toward the 35-year service record.<\/p>
Politicians – both within the coalition and in Merkel's party – argued for a long time about whether and how thoroughly to check whether applicants really need the basic pension. In the end, the government decided to check only the income of pensioners. They will be spared humiliating visits to social offices: income data will be automatically transmitted to pension funds from tax authorities.<\/p>
The increase is significant, especially for women – they are much more numerous among those who currently receive low pensions. For example, a hairdresser who earned at the minimum wage level and retired with a pension of 513 euros can expect an increase to 961 euros.<\/p>
Such an increase, according to the government's plan, should correspond to the principle: "Those who worked should receive more than those who did not work." But the exact formula for calculating the basic pension is complex and will be tied to the amount of contributions to the pension fund, so as not to violate another principle: "Those who paid more should receive more."<\/p>
Those whose total income (including, for example, income from renting out housing) does not exceed 1,250 euros and who meet the other conditions of this social program can count on the basic pension. To avoid abuse, the need for the basic pension will be calculated based on total household income. If the total income of spouses exceeds 1,950 euros, they will not receive the basic pension. Those who have not accumulated 35 years of service also do not qualify for the basic pension.<\/p>
The amount of additional spending on the reform has not yet been announced by the authorities – according to one minister, up to 1.5 billion euros per year will be needed from the budget. The changes will come into force on January 1, 2021.<\/p>