On November 8, 2024, it was reported that approximately 21 million retirees in Germany are expected to see their pensions increase by about 3.5% in 2025, although the exact percentage will be finalized by the federal cabinet in the spring of that year.

It's important to note that pension increases are calculated on a gross basis, meaning that health insurance and nursing care contributions will be deducted before payments are made to retirees.

This pension adjustment is based on current economic predictions and is legally mandated, meaning it is protected from the political instability following the collapse of the Ampel coalition.

Despite the coalition's dissolution, Labor Minister Hubertus Heil remains committed to advancing the pension package through the Bundestag, emphasizing the urgency of making decisions that will take effect early next year.

Retirees can expect another rise in their pensions next year, although the planned increase is lower than previous years, which saw increases of 5.35% in 2022 and 4.39% in 2023.

The anticipated 3.5% increase is less than the previous year's adjustment of 4.57%, which was effective from July 1, 2024.

Current low inflation rates, recorded at 1.6% in September 2024, may allow retirees to retain more of their increased pension without it being offset by rising costs.

For example, a pension of €2,000 would result in an additional €70 per month, while a pension of €1,000 would see an increase of €35.

The coalition parties had been discussing a reform package aimed at stabilizing pension levels long-term, but the future of this package is now uncertain due to the lack of majority support in the Bundestag.

While the pension increase appears secure, other social programs and reforms proposed by the coalition may be jeopardized, potentially affecting retirees negatively.

Factors influencing the pension increase include wage growth and other economic variables, with real wages rising by 3.8% in Q1 2024 and 3.1% in Q2 2024.

This information regarding the pension increase is based on the draft for the 2024 pension insurance report, which has been shared with news agencies.