Good news for pensioners: In the coming year, their payments are to be increased significantly. But the increase will also become a tax trap for many pensioners in Germany.

The approximately 21 million pensioners in Germany can count on more money in the coming year. According to an official estimate, statutory pensions are due in July

climb. The expected increase in 2023 means a plus of for a pension of 1000 euros

This emerges from the draft of the 2022 pension insurance report, which was first reported on by “Bild am Sonntag”. According to the report, pensions are expected to rise by a total of almost 43 percent by 2036. This corresponds to an average growth rate of 2.6 percent per year.

But the pension increase is not good news for everyone. Because tens of thousands of pensioners are only now subject to tax due to the increase. They are then obliged to pay taxes as soon as their income exceeds the annual allowance of 10,347 euros (as of 2022). All income counts for the tax-free amount, in addition to the statutory pension insurance as well as private provision or rental income.

A calculation example:

If a pensioner in the west has received a statutory pension of 850 euros per month and has no other income, the annual pension is 10,200 euros – and thus below the tax allowance.

But if the pension is increased by 3.5 percent in the coming year, his annual pension will be EUR 10,555 – and thus above the allowance. The difference of 355 euros must then be taxed in the future.

The socio-political spokesman for the Union faction in the Bundestag, Stephan Stracke, has also criticized the expected pension increase in the coming year as insufficient. The significant increase reflects the current good development of wages and salaries, said the CSU politician on Sunday. “However, the pension increase will be completely eaten up by the massive inflation with significantly increased energy and consumer prices.” Pensioners would have less in their pockets than before.

According to preliminary official information, consumer prices in Germany in October were 10.4 percent above the level of the same month last year. This is the highest value for about 70 years. The traffic light does not do enough here, said Stracke. “The traffic light relief policy consists largely of patchwork and many announcements.” Instead, what is needed is an inflation brake with effective and rapid relief from a single source.

According to the current plans, the 2022 pension insurance report is to be decided by the cabinet on November 30th. The Bundestag and Bundesrat then have to deal with the data. In future, pensioners will then receive the following rates: