Pension reform: Expert predicts up to 20 percent higher pensions

Pension reform: Expert predicts up to 20 percent higher pensions

The pension reform in Germany is expected to lead to a significant increase in pension payments for future pensioners. According to calculations by financial mathematician Werner Siepe for WELT AM SONNTAG, employees who continually earn the average salary and contribute to the pension fund for 40 years can expect significant increases. A 40-year-old employee with a current average salary of 3,750 euros could expect a pension increase of around 20 percent or around 600 euros after the reform.

The pension increases would also be noticeable for employees who earn 50 percent or 80 percent above the average. Despite the seemingly high amounts, Siepe warns of a possible reduction in purchasing power due to inflation until retirement.

It should be noted that older employees will have to expect lower percentage increases as they will benefit from the changed legal situation for a shorter period of time. For example, a 50-year-old average earner could expect to receive around 2,687 euros instead of 2,393 euros, while a 55-year-old would receive around 2,295 euros compared to 2,115 euros, an increase of around twelve and nine percent, respectively.

The planned reforms are based on the forecasts of the federal government's 2023 pension insurance report and are intended to change the pension formula. The government plans to cover the additional costs partly through intergenerational capital and mainly through contribution increases and government subsidies.