East comes closer to west

East comes closer to west

More than 25 years after reunification, pensions in east and west are to be equalized. Improvements to the reduced earning capacity pension are also planned. But there are still a few steps to go before implementation.

Compromise to equalize pensions in East and West has cleared another hurdle. The federal cabinet approved on Wednesday a corresponding bill by Federal Minister of Labor Andrea Nahles (SPD). According to the plan, eastern pensions are to be raised in seven steps from July 2018 to 2025. The bonus for employees from the East, which has so far mitigated the pension differences between East and West, is not to be completely eliminated until 2025. The Cabinet also approved improvements to the reduced earnings capacity pension.

Contribution rates to be maintained

Labor Minister Nahles spoke of an "important decision" and a "reasonable balance" that had been struck in the government. In December 2016, the SPD politician and Federal Finance Minister Wolfgang Schauble (CDU) had agreed on the financing of the East-West adjustment in pensions. The covenant will participate in stages. This is intended to maintain the contribution rates. Starting in 2022, the federal subsidy will increase by 200 million euros and then by 600 million euros each year from 2023 to 2025. From the year 2025, the increase will then be permanently two billion euros.

The Prime Minister of Saxony, Stanislaw Tillich (CDU), called for corrections to the law in favor of the younger generation. "The welcome improvement of East German existing pensions is paid for with a worse position of future pensions in the new federal states," Tillich told the Dusseldorf-based "Rheinische Post" (Wednesday). The legislative process would have to take into account the point of intergenerational equity.

The leader of the Left Party, Katja Kipping, called the equalization of pensions "more than overdue 28 years after the fall of the Wall". At the same time, she criticized the postponement of the Anpang until the year 2025. East German pensioner households are much more dependent on the state pension, Kipping said. In addition, occupational groups, such as miners working in lignite refinement or employees of the Reichsbahn, are still disadvantaged, just as divorced people were in the GDR.

Improved pension for reduced earning capacity

With the draft law for an improved reduced earning capacity pension, Minister Nahles wants to support people who can no longer pursue their work after accidents, physical or mental problems. In the future, those who are unable to work from 1. January 2018 new to reduced earning capacity pension, receive up to seven percent more. Overall, Nahles expects additional spending of 1.5 billion euros per year by 2030. According to the data, each year about 170.000 people affected.

The president of the German Social Association VdK, Ulrike Mascher, sharply criticized the gradual increase of the reckoning periods for reduced earning capacity pensions as of 2018. It called for the elevation in one step. In addition, Mascher expressed disappointment that the scheme would only apply to new pensioners. More than 1.7 million existing pensioners would be excluded from the improvements, Mascher said.

In this context, the German Trade Union Confederation (DGB) called for a change of course in pension policy and more commitment in the fight against old-age poverty. 5.7 million older people in Germany are at risk of poverty or exclusion, said DGB executive board member, Annelie Buntenbach. To avoid this, the pension level urgently needs to be stabilized and increased, he said.

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