Against poverty in old age: the basic pension is coming!
The basic pension adopted by the Bundestag and Bundesrat is intended to improve the pensions of low earners. The law comes into force on January 1, 2021. The aim is to recognize people's lifetime achievements more fairly and save low earners from having to go to the social welfare office.
Important questions and answers on eligibility requirements, the amount of the basic pension and how to apply.
Who is entitled to the basic pension?
Anyone who has worked for at least 33 years, raised children and cared for relatives but earned little is entitled to a basic pension. The rule of thumb is an average income of a maximum of 80 percent of average earnings per year. Around 1.3 million people will benefit from this in future, including many women and people in eastern Germany. The improvements will also benefit pensioners.
Do I have to apply for the basic pension?
The basic pension does not have to be applied for, it is automatically checked whether an entitlement exists. An income check will be carried out automatically by means of a data comparison between the pension insurance fund and the tax authorities. However, a delay in payments is expected for the first year and the money may be paid out retroactively.
How high is the basic pension?
The maximum monthly basic pension supplement is 405 euros in the West and 391 euros in the East. How much is actually paid depends on the individual case. Information on the amount can be obtained from the pension advice centers.
What are the income limits?
Income is taken into account if it exceeds the allowance of EUR 1,250 for single people and EUR 1,950 for couples. Income above this limit is deducted from the basic pension at 60 percent. If a single person earns 1,300 euros, 50 euros would be deducted at 60 percent - the basic pension would be 30 euros lower. Income above 1,600 or 2,300 euros will be fully offset against the basic pension supplement: For example, if a married couple has an income of EUR 2,400, the basic pension will be reduced by EUR 100.
How is the basic pension calculated?
This is based on the earnings points (EP) earned during the entire insurance period. The average of all earnings points earned must be between 30 and 80 percent of the average earnings (between 0.3 and 0.8 EP). These earnings points are then doubled - to a maximum of 0.8 EP. The value is then reduced by 12.5 percent. This means that the higher your own contributions, the higher your pension will be.
Sources:
Federal Government
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