Pension increase in 2024: What financial experts say about tax liability

Pension increase in 2024: What financial experts say about tax liability

According to a report by www.merkur.de, the pension is expected to increase by 3.5 percent in 2024. This official forecast is based on a draft report from the Federal Government's pension insurance. The pension adjustment is determined annually in the summer, taking into account the nationwide wage development. The last increase was higher, with an increase of 4.39 percent in the west and 5.86 percent in the east, in order to bring the pension value in the new federal states into line with the western level.

Despite the positive news about the pension increase, more pensioners could find themselves liable to pay taxes. This is because pensions are taxable above a certain amount and the taxable annual pension should not exceed the basic tax allowance. The basic tax allowance is expected to increase to 11,604 euros by 2024, which could mean that pensioners will be liable to tax above this amount with a possible pension increase in 2024. This would lead to dissatisfaction among those affected, as they would no longer receive any more net money despite the pension increase.

As a financial professional, it is important to analyze the potential impact of the pension increase. The forecast pension increase of 3.5 percent could lead to additional demand for consumer goods as retirees have more money at their disposal. This could have a positive impact on retail and consumer spending. On the other hand, retirees facing tax liability could have less purchasing power, which could have a negative impact on certain areas of the market.

Overall, it is in the interest of the financial industry to keep an eye on pension developments and take into account their impact on the market in order to be able to react appropriately.