Pensions permanently less valuable due to inflation – one generation particularly affected

Pensions are being increased year after year, but the recent high inflation is causing pensioners' purchasing power to fall. The outlook is not good for a certain age group.

Hamm – The rising inflation of recent years poses a serious threat to the purchasing power of pensioners. A recent study by the German Institute for Asset Formation and Pension Provision (DIVA) has shown that statutory pension increases are not sufficient to compensate for the loss in value caused by inflation. For future pensioners, this could mean that their standard of living in old age could decrease significantly.

Pension: The inflation surge from 2021 to 2023 will lead to losses in purchasing power

The study analyses the development of pensions from 2021 to 2023 and concludes that pensions have been adjusted, but often below the rate of inflation. This means that pension benefits are losing purchasing power year after year. Pensioners can also afford less and less with their money – an effect that accumulates over the years and can lead to a significant loss.

This loss of purchasing power affects all pensioners, both current and future. However, those particularly affected are those who are 45 today and will retire in around 20 years. The study predicts a so-called “pension purchasing power gap” for this age group, which is between 7,000 and 40,000 euros over the entire pension period. The loss is particularly high for professional groups with above-average incomes. For them, the gap could be as much as 2,000 euros per year.

In 2025, pensioners can be happy: pensions will rise. But the Bundesbank warns of a deficit in the pension fund.

Inflation and pensions: which age groups are particularly affected

The following table from DIVA shows examples of the purchasing power gaps for 45-year-olds in various occupational groups.

The DIVA study warns against relying solely on the statutory pension. In the future, this will hardly be enough to maintain the usual standard of living. The demographic development – more and more pensioners and a shrinking number of contributors – is further exacerbating this problem. “I can only recommend that future pensioners start thinking about their retirement provision very early on,” says Professor Michael Heuser, scientific director of DIVA, to the news website t-online“The statutory pension is not superfluous now, but the problem will become even more serious in the future.”

Study: Authors urgently recommend reform of the Riester pension

The authors of the DIVA study recommend various measures to counteract the looming pension gap. A private pension insurance with inflation protection could be a solution. But other forms of wealth creation, such as home ownership or investments in fund savings plans, should also be considered. “I think it's a very appealing idea to use the productive capital of our economy so that individuals can better provide for their old age,” says DIVA Director Heuser. t-online.

In addition to individual measures, the authors of the study also call for government reforms. In particular, the “Riester pension”, which is considered one of the main pillars of private pension provision, needs urgent revision, say the authors of the study. Although the coalition agreement provides for a reform, concrete steps have not yet been taken.

The pension reform of the traffic light coalition is under criticism: experts warn of a financing gap of 43 billion euros from 2036.