Pensioners are falling behind, ministry admits

Calculations prepared by the federal Labour Ministry have found that the purchasing power of the government pension has shrunk considerably in the past 10 years and old-age poverty is increasing in the long term, according to daily Süddeutsche Zeitung, which has seen the figures.

The figures were given to the socialist Left party after its chairman Klaus Ernst asked the government for precise numbers on how the real value of the pension had changed since 2001.

The answer from the Labour Ministry revealed that from 2001 to 2010, consumer inflation ran at an average of 1.36 percent while pension benefits rose at 0.82 percent per year, Süddeutsche Zeitung reported, adding that this was the first time the government had acknowledged the shortfall in figures.

Pensions are currently rising at an annual rate of 0.99 percent per year against an inflation rate of 2.3 percent, the paper added.

According to the Left party’s calculations, the real value of the pension has fallen 7 percent in the past decade.

Employees have fared little better, according to the information provided by the Labour Ministry. For seven of the last 10 years, workers on average suffered real wage losses – in 2001 and from 2004 to 2009. In 2010 their wages adjusted for inflation grew for the first time in six years, by 1.1 percent.

“A wave of old age poverty is rolling over Germany. If pensions continue to sink at this pace, the average pension will in 10 years be under the basic safety net.”

The ministry pointed out in its answer that under Germany’s pension guarantee, pensions are linked not to inflation but to wages.

The Local