Pensions will rise more in the summer than they have in years. The Federal Minister of Labor has put the brakes on – otherwise the plus would be even higher.

A positive decision for millions of pensioners: in the Bundestag on Friday, the coalition launched a record-breaking pension increase on July 1st and improvements in the disability pension – the most important questions and answers.

A draft law was passed by Minister of Labor Hubertus Heil (SPD) to adjust pensions in 2022 and to improve benefits for the disability pension. With this law, the government reintroduced the catch-up factor in pension insurance and paved the way for the annual increase in payments. Pensions will rise by 5.35 percent on July 1 in the West and by 6.12 percent in the East. Improvements have also been decided for people who have been drawing a disability pension for some time.

As a result of the increase, a monthly pension of 1000 euros, which is only based on western contributions, increases by a good 53 euros on July 1st, for example, and an equally high pension with eastern contributions increases by 61 euros. It is the strongest increase in decades.

The increase in pensions is due to the good wage development in Germany. This is why premium income increased significantly again last year after the corona-related slump in 2020. Without the reintroduction of the catch-up factor, the increase in pensions would have been even greater. Out of consideration for the pension fund, this factor dampens the increase. This compensates for the fact that pensioners did not previously have to accept any cuts despite the general corona dip. A pension guarantee had caused a zero round in 2021.

Anyone who has been drawing a disability pension for a long time and has not been able to benefit from various improvements since 2014 will experience improvements. In the future, those pensioners who received a disability pension from 2001 to 2018 will receive a supplement of 4.5 or 7.5 percent – and thus a higher monthly pension. In total, around three million pensioners are to benefit from these surcharges.

“It is important to me that pensioners are not decoupled from general wage and salary developments in the future either,” says Heil. And with regard to the improved disability pension, he emphasized: “This is about around 3 million people who will benefit from supplements.” Annually, 2.6 billion euros would be spent on this.

The employers’ association BDA had warned of ever-increasing costs of pension insurance due to the government’s lack of will to reform. “Pensions, which, like this year, are rising much faster than wages, are not affordable in the long run,” said the association. The unions also criticized the new law because of the dampening factor. “Applying the catch-up factor remains a serious technical error on the part of the federal government: in doing so, it is permanently decoupling pensions from wage developments,” said Anja Piel, board member of the German Trade Union Confederation (DGB).