July 2019

12Jul

Pensions in Germany will be 100 percent taxable by 2040

Many-a-person in Germany breathes a sigh of relief upon entering retirement: “Finally, an end to all that taxation!” It may come as a nasty surprise, therefore, that around a quarter of pensioners in Germany still have to pay income taxes - and the number is set to increase over the next few years. One in four pensioners in Germany paid income tax in 2015 According to official figures from Destatis, the Federal Statistical Office, in 2015 around 21,2 million people in Germany were receiving either a...

July 12, 2019
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May 2019

30May

Poverty risk could increase for German pensioners if pension level continues to fall: study

The poverty risk rate for people aged 65 and over would rise by up to 20 percent if the German pension level continued to fall and the framework conditions did not change, according to a study by the German Institute for Economic Research (DIW) published on Wednesday. The DIW study showed that under current laws, the German pension level is expected to fall continuously to around 43 percent in 2045 from 48 percent today. Since the early 2000s, Germany's...

May 30, 2019
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01May

Pensions in Germany to rise by more than 3 pct after annual adjustment

The German federal cabinet approved a decree by the Ministry of Labour and Social Affairs on Tuesday that will see pensions in Germany rise noticeably. The cabinet approval of the annual pension adjustment, which is based on wage developments, will increase pensions in western Germany by 3.18 percent as of July 1, and by as much as 3.91 percent in eastern Germany. German Labour and Social Affairs Minister Hubertus Heil commented that the rise was an "extraordinarily positive development in pensions". The...

May 1, 2019
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April 2019

22Apr

The Effect of Pension Subsidies on the Retirement Timing of Older Women: Evidence from a Kink Design in Germany

By Han Ye (University of Mannheim; IZA) I estimate the effect of additional pension benefits on women’s retirement decisions by examining a German pension subsidy program for low-pay workers. The subsidies have a kinked relationship with the recipients’ past contributions, creating a sharply different slope of benefits for similar women on either side of the kink point. I find that a 100 euro increase in the monthly benefit induces female recipients to claim their pensions eight months earlier. A back-of-the-envelope...

April 22, 2019
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February 2019

28Feb

Germany struggles to stop Nazi war payment suspicions

A Belgian bid to stop Berlin from paying pensions to alleged Nazi collaborators has exposed a cloud of confusion and suspicion - including in Germany - over payments still made to 2,000 people worldwide. The controversial law in question is known innocuously as the Federal German War Victims' Assistance Act, or the "Bundesversorgungsgesetz", but tabloid-style Bild daily calls it "Hitler's pensions". The debate surrounding the law exploded again on February 20th when the Belgian parliament voted on a resolution...

February 28, 2019
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19Feb

Germany. Retirement: income for the pension insurance increased significantly

The revenue of The statutory pension insurance increased significantly in January: With 19.4 billion euros, the level was 5.3 percent year-on-year. According to a spokesperson of the German statutory pension insurance scheme, the development is due mainly to the increase in wages and high employment. However, the so-called Sustainability reserve of the pension Fund decreased in January to 38 billion Euro, a decrease of 0.2 percentage points compared to January, 2018. That’s the equivalent of 1,69 month of...

February 19, 2019
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19Feb

Munich Re closes longevity swap deal with Lafarge pension scheme

German reinsurer Munich Re has completed a longevity swap deal with the Trustee of Lafarge UK Pension Plan, the UK pension scheme of French industrial company Lafarge. The arrangement is intended to reduce the Plan’s exposure to longevity risk, which arises when pensioners live longer than expected and thus claim more money on their retirement plans. Lafarge identified longevity risk as the largest individual risk in its plan due to its focus on defined benefit (DB) schemes, which pay...

February 19, 2019
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January 2019

19Jan

The Effect of Self-Employment on Income Inequality

By Stefan Schneck (Institut für Mittelstandsforschung (IfM) Bonn) It is well known that the self-employed are over-represented at the bottom as well as the top of the income distribution. This paper shifts the focus from the income situation of the self-employed to the distributive effects of a change in self-employment rates. With representative German data and unconditional quantile regression analysis we show that an increase in the proportion of self-employed individuals in the labor force increases income polarization by tearing...

January 19, 2019
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August 2018

30Aug

Germany. German coalition agrees upon measures to stabilize pensions

Labor Minister Hubertus Heil told ZDF television Wednesday that the measures agreed upon late Tuesday would bring "stability and security" for retirees by keeping pensions at 48 percent of a retiree's average working salary until 2025. Other measures include reducing employees' contributions to unemployment insurance by 0.5 percentage points to 2.5 percent of an employee's salary. Chancellor Angela Merkel's junior coalition partner, the Social Democrats, had hoped to stabilize pensions until 2040, but Heil said he was satisfied with the compromise,...

August 30, 2018
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28Aug

Germany: Merkel’s government argues about future pensions

German Chancellor Angela Merkel’s government is arguing about pensions, with Merkel’s center-left coalition partners pressing for a guarantee that they will remain stable until 2040. The coalition of Merkel’s conservative Union bloc and the center-left Social Democrats agreed when it took office earlier this year to ensure pensions remain at the current level of 48 percent of average wages through 2025. The Social Democrats are struggling in polls and looking to woo left-leaning voters. Finance Minister Olaf Scholz, a Social Democrat,...

August 28, 2018
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