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Germany: Retired but not retired

Written by Norman Hanert for Preußische Allgemeine Zeitung.

The planned increase in pensions is not enough to offset the increased costs - In addition, many retirees will be subject to tax.

On July 1 of this year, pensioners will receive the largest increase in their old-age benefits in decades. In the west of the country, pensions will increase by 5.35 percent, in the eastern federal states by as much as 6.12 percent. When the Bundestag debated the pension adjustment in May, Federal Labor Minister Hubertus Heil said: "Most pensioners in Germany do not live in the lap of luxury." The SPD politician pointed out that agency reports about the planned pension increase were often illustrated with photos that show retirees who are "either sitting on a park bench and tanned or playing golf." In fact, many retired people are often far less fortunate than such images suggest. According to the German pension insurance, the average monthly pension in Germany in 2020 was only 989 euros per month. Of the approximately 21 million people who receive an old-age pension from the statutory pension insurance system, only a fraction receive 2,000 euros or more per month.

Around 18 percent of people over 65 in Germany are considered poor compared to the average population. Since the pension is so low that it is not enough to live on, around 600,000 seniors even receive additional basic security. For more and more old people in Germany, it has long since become reality to continue working after retirement. Not always, but often and increasingly, financial reasons play a role.

According to the federal government, 1.05 million employees in Germany were aged 67 or older last year. Of these, 217,000 people were employed and 835,000 had a mini-job. This data became known through the government's response to a request from the Left Party in the Bundestag. The number of working pensioners has increased significantly in recent years. In 2010, there were only around 685,000 employees in Germany who were 67 years of age or more.

The increase was particularly strong in the eastern part of the Federal Republic. Here, the number of working people of retirement age climbed from around 90,500 in 2010 to 162,000 last year. For comparison: In the western federal states, the number of employed pensioners rose from almost 600,000 to 890,000 in the same period. In about 80 percent of the cases, it was a so-called mini job. The high proportion of mini-jobbers is mainly due to the additional income limit: everything that pensioners earn above this limit is partly deducted from their pension.

Some senior citizens will probably only view the sharp increase in pensions in the middle of the year with very mixed feelings. It is estimated that around 100,000 pensioners will be subject to tax with their total income as a result of the pension increase. For the affected seniors, the pension increase may mean that they will have to hand over part of their pension to the tax office in the future. According to reports in the newspapers of the Funke media group, the Federal Ministry of Finance can expect around 730 million euros more in tax revenue from pensioners.

Increasing tax liability on pensions, high ancillary rental costs, rising energy and food prices could soon force even more seniors to look for work to make ends meet.

According to the plans of the "traffic light" coalition, pensioners of all people should not benefit from the billion-euro relief package. In order to cushion the rise in prices for petrol, diesel, gas and oil for German consumers, the government wants to pay an energy flat rate of 300 euros in addition to a tank discount, a Hartz IV subsidy, a nine-euro ticket and a child benefit bonus. As early as May, the CSU social politician Max Straubinger accused the SPD, Greens and FDP of withholding the energy price flat rate from pensioners.

Despite weeks of criticism, the traffic light coalition has so far stuck to its decision not to pay the energy flat rate to retirees. However, the flat rate takes into account senior citizens who are employed and liable for tax. After all, Minister of Labor Hubertus Heil announced further relief in the event of long-lasting price increases: "If the price increases last a long time, then we will also take further measures, including for pensioners."

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