The Basic Pension Comes - Federal Cabinet Decides On the Pension Supplement

Financial security in old age is an issue that is causing stomach pains for more and more people in Germany. Low-wage earners fear the elderly. The basic pension, which has been discussed for a long time and is now, finally resolved, is intended to remedy the situation.

Cabinet decision: Basic pension from 2021

After months of political discussions, the Federal Cabinet has now agreed: The basic pension should come from 2021. The coalition approved the draft law of Labor Minister Hubertus Heil from the SPD, as Heil announced together with Interior Minister Horst Seehofer (CSU) and Health Minister Jens Spahn (CDU) at a press conference. The decision was a major socio-political milestone, said Heil.

Who receives the basic pension?

The basic pension should benefit low earners who can prove that they have contributed at least 33 years. Eligible benefits can come from both professional employment and periods devoted to education or care. However, they are only taken into account if they correspond to at least 30% of the average annual income. The SPD states that at least 1.5 million people will benefit from the basic pension. It should not be necessary to apply for the pension supplement. Instead, the beneficiaries are to be found through an automated data comparison by the tax office.

How is the basic pension calculated?

The low-wage earner receives an average pension point for each year that can be counted as the basic pension period. Each point is ultimately worth between 31.89 in the east and 33.05 in the west of Germany. Depending on the points balance, monthly pension surcharges of different levels can be expected. The income of the beneficiaries is counted as a percentage of the basic pension for single persons from 1250 and for couples from 1950. Monthly earnings above this are initially reflected in 60% of the amount of the basic pension. A full credit is only made from an income of 1600 or 2300. When calculating the pension surcharge, apart from regular income, investment income is also taken into account, which is determined as part of the income test.

How should the basic pension be financed?

The financing of the basic pension has not yet been finalized. It is planned to draw the required funds from tax income, which could be contributed, for example, by the planned financial transaction tax. According to Labor Minister Hubertus Heil, the basic pension will add up to around 1.3 billion euros in the first year. The expected administrative effort is already included here. The examination of the beneficiaries alone should employ around 650 employees for a period of one year.

Comments on the basic pension from the net

The basic pension was also repeatedly discussed on social media. Of course, the gang cabinet decision does not go uncommented either. Heike Taubert, member of the state parliament of the SPD in Thuringia, expressed victory-consciously on Twitter:

A @spd promise made and a good day for the #east

Meanwhile, the group leader emphasized the left, Dietmar Bartsch, the inadequacy of the decision:

The German pension level is one of the lowest in Europe. The pensions must increase for everyone. This is feasible if everyone, including MPs, civil servants and the self-employed.