Basic pension should come in early 2021 – but there will be money later

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After a long dispute, the Bundestag and Bundesrat can pass until the end of the week, and thus before the summer break, the better coalition plans for lower pensions planned by the grand coalition.

The Union wants to agree, although the financing of the basic pension is not yet satisfactory, CSU regional group leader Alexander Dobrindt made clear in Berlin. It is about creating security for the pensioners concerned. For this reason, one accepts that the financing comes from the federal budget as long as there are no other financing options, said Dobrindt.

Basic pension starts on 1.1.2021, first payments from 1.7.

The Basic Pension Act is due to start on January 1, 2021. This is intended to improve the pensions of around 1.3 million people with small salaries. The costs are estimated at 1.3 to 1.6 billion euros per year. The beneficiaries should automatically receive the basic pension like the regular pension. According to Mast, the first money should only flow in July 2021 due to the administrative challenge – but then retrospectively to January. This was also made clear by CDU parliamentary group leader Ralph Brinkhaus.

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Finance minister Olaf Scholz (SPD) originally wanted to finance the basic pension with a new EU-wide tax on financial transactions. However, numerous member states, such as Austria, reject the instrument. The Union is also concerned about Scholz’s plans. For the time being, the taxpayer will finance the basic pension.

These are the basic data of the basic pension

Union and SPD had agreed on the basic pension in the coalition agreement. The legislative proposal was delayed for a long time because the coalition parties were arguing over the question of a means test.

In November 2019, a compromise was reached: a comprehensive income check is to take place. According to the compromise at the time, the basic pension should be paid up to an income plus pension and investment income of

  • 1250 euros for single people
  • 1950 euros for couples

The responsible Federal Ministry of Labor and Social Affairs explains on its website the exact criteria according to which the basic pension is designed. It says: “The average basic pension supplement – that is, the supplement to the regular pension – is good 75 Euro (gross). The maximum can be the surcharge 404,86 Euro (gross). “

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However, only retirees with low pensions get the money if they have paid into the German pension insurance for a long time: they have to at least 33 years can show at so-called basic pension times. These are different periods of employment that are recognized for an entitlement to receive a basic pension.

Anyone who was insured for a longer period of time subject to social security contributions and for at least 35 years “Basic retirement periods” come with higher supplements. There is a supplement variant for everyone who has a credit period between 33 and 35 years. The respective amount of the basic pension is determined according to a complicated basic pension formula.

German pension insurance expects high administrative expenses

The German pension insurance (DRV) federal government expects a high administrative effort to filter out those with a right to the supplement from the almost 26 million pensions. Stephan Fasshauer of the DRV Bund recently said that people who are already retired and who are entitled to the supplement will probably not receive their decisions until the end of 2022.

Union rejects financing through new stock exchange tax

The Union is upset that the basic pension should be financed through a tax on financial transactions, but the introduction of which is still not foreseeable at European level. Dobrindt also accused Heil of failing to keep funding commitments. The 400 million euros announced by Heil from the Ministry of Labor budget have not yet been secured.

According to Dobrindt, there are strategic reasons why the Union wants to agree before the summer break despite open financing questions. The SPD did not want to be given the opportunity to cover the summer months with a pension issue, he argued.

It takes time to set up the needs test for basic pension recipients

Union parliamentary group leader Ralph Brinkhaus (CDU) now underlined that for the CDU and CSU, a needs test was the decisive condition for the basic pension.

According to the dpa news agency, the income test will be carried out “automated and citizen-friendly” through a data exchange between the pension insurance and tax offices.

According to Brinkhaus, it is not possible to check the eligibility until January – “and that is why it is also the case that the payment cannot be made by January 1st”.

SME and economic union criticizes basic pension

According to the SME and Economic Union (MIT), this basic pension creates new injustices. “In the end, those who have worked 40 hours a week for more than 32 years should not receive a basic pension – but someone who has worked only 20 hours for 35 years should be”, criticized Carsten Linnemann (CDU), MIT’s Federal President.

SPD leader Esken praises the persistence of her party

SPD leader Saskia Esken said: “The persistence of the SPD has paid off.” That is good news for over a million pensioners in Germany. “Anyone who has worked for years, raised children or cared for relatives will finally get recognition for their life’s work – and will no longer have to take the path to office in old age.”

FDP criticizes basic pension as an unsuitable remedy for poverty in old age

The pension policy spokesman for the FDP faction, Johannes Vogel, accused the Union of having buckled. “The basic pension is and remains the wrong concept to combat poverty in old age. Around three quarters of the 500,000 people who depend on basic security in old age despite pension claims are completely empty. At the same time, over 90 percent of the possible basic pension recipients are not at all dependent on basic security in old age. ”

Left-wing chairwoman Katja Kipping argued: “This so-called basic pension … excludes many people, not least people who have done long unpaid educational and care work in the family” – above all, many women.

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