Inflation threatens pensioners’ purchasing power

The purchasing power of pensioners is dwindling, warns a new study. The solution could lie in private pension insurance, say the study authors.

Frankfurt – The high inflation of recent years poses a threat to the purchasing power of pensioners. This is shown by a recent study by the German Institute for Asset Formation and Pension Provision (DIVA). The statutory pension increases are sufficient to compensate for the loss in value due to inflation, the study says. For future pensioners, this could mean that their standard of living in old age will drop considerably.

Pension: Inflation surge 2021 to 2023 leads to high loss of purchasing power

The DIVA study examined the development of pensions in the years 2021 to 2023 – with the result: Although pensions were adjusted, they were often below the inflation rate. As a result, pensions 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.

Inflation and pensions: Today, 45-year-olds are particularly affected

This loss of purchasing power affects all pensioners, including those about to retire, according to the study. But those particularly affected are those who are currently 45 and will be retiring 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 occupational groups with above-average incomes. For them, the gap could be up to 2,000 euros per year. The following table shows examples of the purchasing power gaps calculated by DIVA for 45-year-olds in various occupational groups.

DIVA warns: Statutory pension will hardly be sufficient in the future

The DIVA analysis warns against relying solely on the statutory pension. In the future, this 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.

“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 site t-online“The statutory pension is not superfluous now, but the problem will become even more serious in the future.”

Study authors: Riester pension needs urgent reform

The DIVA study recommends various measures to counteract the looming pension gap. A private pension insurance with inflation protection could help. 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 state reforms. The “Riester pension”, which is considered one of the main pillars of private pension provision, in particular needs urgent revision, say the study authors. The coalition agreement does provide for a reform, but concrete steps are still pending.