More pension for low earners: information on entitlement to and amount of the basic pension.
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.
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 no more than 80 percent of average earnings per year. Around 1.3 million people will benefit from this in the future, including many women and people in eastern Germany. The improvements will also benefit pensioners.
The basic pension does not have to be applied for; an automatic check is carried out to determine whether an entitlement exists. An income check will be carried out automatically via a data comparison between the pension insurance fund and the tax authorities. However, there will be a delay in payments for the first year and the money may be paid out retroactively.
The maximum monthly basic pension supplement is €405 in the west and €391 in the east. How much is actually paid depends on the individual case. The pension advice centers can provide information on the amount.
Income is taken into account if it exceeds the allowance of €1,250 for single people and €1,950 for couples. Income above this limit is deducted from the basic pension at 60 percent. This means that if a single person earns €1,300, €50 would be deducted at 60% and the basic pension would be €30 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 €2,400, the basic pension will be reduced by €100.
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. The higher your own contributions, the higher your pension will be.
Sources:
Federal Government