Thousands of pensioners frustrated at the beginning of 2024 – Will the basic pension rule soon be abolished?

The introduction of the basic pension was intended to combat poverty in old age – but the income test has been causing discontent for months. Will it be abolished?

Munich – Poverty in old age is a bitter reality for many pensioners, despite many years of employment. No one reaches the maximum pension quickly in Germany. To counteract this problem, the basic pension was introduced in 2021. It is intended to easily benefit those who have worked for many years but received below-average wages. However, receipt of the basic pension is linked to an income test, which has led to fierce criticism despite the well-intentioned intention of a financial supplement.

Some pensioners found that their basic pension was reduced due to the income test

According to the German pension insurance, basic pensions are paid to those who can demonstrate at least 33 years of basic pension periods and whose pension is below the subsistence level. Basic pension periods include periods of employment, child-rearing and care.

The income test requires an annual review of the pensioners' income. The income limit for single people is 1,375 euros per month and for married couples 2,145 euros. In addition to pensions, the German pension insurance also counts taxable income, rental income and payments from private and company pension plans as eligible income.

The income test for the basic pension is met with harsh criticism: “It would be best to abolish it altogether”

At the beginning of the year, many pensioners were in for an unpleasant surprise when they discovered that their basic pension had been reduced due to the income test. If their income increases and exceeds the monthly allowance of 1,375 euros, they will receive less money. This triggered a wave of indignation among those affected, who had hoped that state support would provide more stability and fewer bureaucratic hurdles.

The German Social Association (SoVD) and its chairwoman Michaela Engelmeier have therefore been calling for the abolition of the income test since the beginning of the year. “Especially now – in a phase of high inflation – (…) the income test for the basic pension must be suspended, ideally abolished altogether,” Engelmeier stressed on the SoVD website in February. She criticizes the test as being too bureaucratic and ineffective. The FDP sees the basic pension as too expensive and inefficient overall. A study confirms that the basic pension only supports a few pensioners.

Following a survey on old-age poverty, the social association VdK is calling for an adjustment of the basic pension

The topic recently flared up again: The social association VdK conducted a survey on pensions in August and found that many pensioners are afraid of poverty. Current figures from the federal government on August 21 confirm that this fear is justified: According to them, a total of 14.4 percent of the total population of all age groups were at risk of living in poverty in 2023.

The social association is therefore calling for an adjustment of the basic pension. Many pensioners are currently forced to continue working even after they retire. This is leading to “a division within the older generation into the well-qualified skilled workers who can continue to work and those who cannot,” according to the VdK. The association emphasized as early as 2023 that a reform of the basic pension must also include the end of the income test.

However, the CDU has so far stuck to the basic pension and the associated income test. They argued that without this test, a fair distribution of funds would not be guaranteed. Stephan Stracke of the CDU has stressed in the past that waiving the income test would be tantamount to “distributing money with a watering can,” as the portal gegen-hartz.de cited. Whether the income test for the basic pension will actually be abolished is therefore still up in the air – despite the overwhelming criticism. (tt)