The pension increase is okay

The government adheres to the principle that pensions follow wages. It should stay that way – even if times get worse.

The development of pensions depends on wages - this should apply in good times and bad.

In Crises are not fair, even if they happen all over the world at the same time. Some are already feeling the economic impact of the coronavirus, because they are not allowed to go to work and thereby lose their livelihood, at least temporarily. Others have to accept reduced wages and worry about the continued existence of their jobs. Many of those who work to keep the country going will likely soon have less money in their pockets than they thought.

It looks completely different for the approximately 21 million pensioners in Germany. Financially, they are safe in Corona times. The pension insurance will continue to transfer the pension to you reliably – from July onwards even with a hefty surcharge.

Now the cabinet has decided to adjust pensions by 3.45 percent in the west and 4.2 percent in the east of Germany. Politicians are ignoring the radical proposal of the economic research institute IW, which had called for the pension adjustment to be halved in order to allow pensioners to participate in the foreseeable loss of prosperity in society.

Stick to the formula

Did politics miss this opportunity? No. As often as the black-red coalition’s pensioner-friendly policy is worthy of criticism – from retirement at 63 to mothers’ pensions to basic pensions – their adherence to the pension increase this year is right. The pension formula is designed in such a way that the adjustments are essentially based on the wage development of the previous year, and this was extremely positive.

Fiddling with the pension formula is out of the question both for the benefit of the pensioners and at their expense. Reliability is essential.

It doesn’t matter that many older people would be willing to forego half the increase in the current crisis. Others cannot afford that – quite apart from the exceptional situation in which many older people are in terms of health due to Corona.

All of this does not mean, however, that pensioners will not have to suffer the loss of prosperity, if it turns out to be real, in the next few years. Their pensions cannot decrease because of a statutory guarantee. But nothing should stand in the way of a subdued rise in pensions – not even a “stop line” for the pension level, as the coalition established in law at the beginning of the electoral term.

The holding line of 48 percent of average earned income is an arbitrary arithmetic value that says nothing about the amount and purchasing power of the pension. This can be clearly seen from the fact that the pension level only rises once the income of employees falls – for example due to short-time work or unemployment during the crisis.

The coalition should quickly revise its stop-line legislation so that the rise in pensions can be dampened from next year onwards. The principle of intergenerational justice, which also counts in times of crisis, demands no more and no less.