The German state pension is set to rise by 4.57 per cent at the beginning of July, the first time that the increase has been applied equally across the country since reunification.

According to a statement from the Deutsche Rentenversicherung (DRV), the state body responsible for pensions in the country, the increase will be uniform across the entire country. Until last year, pension increases differed across the states of the former German Democratic Republic (East Germany).

DRV president, Gundula Roßbach, said: "In the past, pensions have also risen faster than consumer prices on average. Since 2014, pensions in the West have risen by an annual average of 2.9 per cent, while pensions in the East have risen by 3.9 per cent. In the same period, consumer prices have risen by an average of 2.4 per cent annually."

The pension adjustment is once again significantly higher than the expected average price development. According to the 2024 Annual Economic Report, the German government expects consumer prices to rise by 2.8 per cent.

Roßbach added: "In the past, pensions have also risen faster than consumer prices on average. Since 2014, pensions in the West have risen by an annual average of 2.9 per cent, while pensions in the East have risen by 3.9 per cent. In the same period, consumer prices have risen by an average of 2.4 per cent annually."

DRV figures indicate that Germany’s western states saw an increase of 3.45 per cent in 2020, no increase in 2021, 5.35 per cent in 2022, and 4.39 per cent in 2023. In comparison, the eastern, former GDR states, saw increases of 4.2 per cent, 0.72 per cent, 6.12 per cent, and 5.86 per cent in the same years.

The Federal Minister of Labour, Hubertus Heil, spoke about the increase. Heil was on these pages last week when he said he was looking at whether to include civil servants and the self-employed in the statutory pension insurance scheme. This, along with other measures, was set out a few weeks ago in what is known as ‘Pension Package II’.

Heil now says that the increase in the state pension is good news for pensioners.

He said: “The strong labour market and good wage settlements make this possible. This year, for the first time, the pension adjustment is the same throughout Germany and is significantly higher than the inflation rate. Thirty-four years after German reunification, this is a milestone for our country. Work is worth the same in East and West when it comes to retirement!”

He added: “To ensure that pensions remain reliable in the future for all those who work and are diligent today, we are stabilising the statutory pension in the long term with the Pension Package II and at the same time relieving the burden on future contributors with the generational capital. In this way, we ensure that the younger generation will also benefit from growth in the future and will not become poorer than the working population. Stable pensions are not a luxury, but have been the basis of our social market economy for decades and guarantee stability and social peace.”

Despite Heil’s claims, it seems likely that there will be continued controversy over the impact of the country’s pension reforms on younger generations.

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