Inflation eats up pensions: study shows alarming forecasts

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Status: 07.09.2024, 21:24

From: Sven Fekkers, Robert Wallenhauer

The statutory pension is barely sufficient to compensate for the loss in value due to inflation. Experts are assessing future private pension provision.

Germany – A recent study warns of a dwindling purchasing power among pensioners. The authors of the study see private pension insurance as a possible solution.

Inflation eats up pensions: study shows alarming forecasts

The persistent inflation of recent years poses a serious threat to the purchasing power of pensioners, according to a recent study by the German Institute for Asset Formation and Pension Provision (DIVA). The study finds that the statutory pension increases are just enough to compensate for the loss in value caused by inflation.

This could mean that future retirees’ standard of living in old age could drop significantly, reports Merkur.deThe DIVA study analyses the development of rents from 2021 to 2023 and concludes that although rents have been adjusted, they are often below the inflation rate.

This means that pensions lose purchasing power year after year. Pensioners can also afford less and less with their money – an effect that builds up over the years and can lead to a significant loss (more on the subject of pensions at RUHR24).

Pension: Inflation becomes a danger – 45-year-olds particularly affected

The loss of purchasing power affects all pensioners, including future pensioners, according to the study. However, those particularly affected are those who are 45 today and will retire in about 20 years. For this age group, the study predicts a “pension purchasing power gap” that could amount to between 7,000 and 40,000 euros over the entire pension period.

Professional groups with above-average incomes are particularly badly affected. For them, the gap could be as much as 2,000 euros per year. The following table shows how the purchasing power gaps affect future pensions for people aged 45 today: (More political news at RUHR24).

Statutory pension is not enough – DIVA study warns

The DIVA study warns against relying solely on the statutory pension. In the future, it will hardly be enough to maintain the usual standard of living. Demographic developments – more and more pensioners and a shrinking number of contributors – are further exacerbating this problem (more political news at RUHR24).

Professor Michael Heuser, scientific director of DIVA, strongly advises future pensioners to think about their retirement provision. “I can only recommend that future pensioners start thinking about their retirement provision very early on,” he told t-online“The statutory pension is not superfluous now, but the problem will become even more serious in the future.”

Pension gap in old age: Experts recommend various measures to prevent it

The authors of the study recommend various measures to counteract the looming pension gap. 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 is a very charming idea to use the productive capital of our economy so that individuals can better provide for their old age,” says DIVA Director Heuser to t-onlineIn 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, according to the authors of the study. Although the coalition agreement provides for a reform, no concrete steps have yet been taken.