Pension reform 2025: Millions will benefit from a 3.74% increase!

Pension reform 2025: Millions will benefit from a 3.74% increase!

From June 2025 there will be important changes for pensioners in Germany. A planned pension increase of 3.74 percent will come into force on July 1, 2025, but this must first be approved by the Federal Council. The board's approval will be required by the end of June to ensure the new pension values ​​are paid out. An advance payment could make some pensioners see an increase in their account in advance, so that the anticipation of the change can be redeemed to some extent.

In addition to this adjustment, a pension supplement of up to 7.5 percent will be paid out for up to three million pensioners between June 10 and 20, 2025. These measures are part of a larger framework dealing with new entries into the pension system. New pension additions are planned for June 2025, which depend on age and payments into the pension fund. Those born in 1960 have special circumstances, as there is no new access to a tax-free old-age pension at this point in time.

Pension adjustment 2025 and calculation

The issue of pension adjustment is of great importance in Germany and takes place every year on July 1st. As the German pension insurance explained, this increase is calculated based on pay points. The acquired pension entitlements are multiplied by the current pension value, which is redetermined on July 1st of each year. For 2025, the current pension value will increase from 39.32 euros to 40.79 euros.

The government body determines the amount of the pension adjustment in an ordinance, which also requires the approval of the Federal Council. After the pension adjustment, a pension of 1,000 euros will therefore rise to 1,037.40 euros. The pension values ​​between East and West Germany were 100 percent equalized as early as 2023, meaning that the pension adjustment is the same for all pensioners.

Relevant factors and deadlines

For 2025, various factors are relevant that influence the pension adjustment. These include the wage factor, the net quota effect and the current pension value. The wage factor is 1.0369, while the net ratio has a value of 1.0005. A level protection clause ensures that the pension level does not fall below 48 percent by 2025. The security level before taxes is also 48.0 percent and is calculated from the available standard pension and the average salary.

Retirees are encouraged to keep an eye on their deadlines. It is particularly important to check account statements and, if necessary, seek advice in order to make optimal use of all claims. Between June 14 and July 23, 2025, pension recipients will also be informed about the upcoming adjustments, which will be sent via Deutsche Post AG's pension service.

The changes in the pension system are not only an adjustment to the economic circumstances, but also an expression of the appreciation for the life achievements of pensioners. The coming months will be exciting for everyone affected, who can look forward to the upcoming innovations.