Pension: basic pension causes frustration among pensioners

Pension: basic pension causes frustration among pensioners

The first retirees have received surcharges on their retirement benefits from the basic pension receive. In July, the German Pension Insurance (DRV) had already sent the first notices to entitled persons.

But some pensioners and retirees will struggle with the Payout their surcharges still have to be patient until 2023. It is not the only point of criticism at the present basic pension regulation.

Basic pension: Does it turn out to be a bureaucracy monster as feared??

That some pensioners and retirees still have to wait more than a year for the payment of their basic pension claims, is due to the high Administrative expenses in the examination by the DRV. Whereupon these also already before entry into force of the appropriate law to the 1. January 2021 pointed out.

There is about 26 million Pensioners whose possible claims to basic pensions need to be reviewed. Because of the inclusion of data on income, this also takes place in complicated cooperation between the DRV and the tax office. Employers' associations and opposition politicians had already warned before the introduction of a Bureaucracy monster warned.

Basic pension: no entitlement review until 2023

First, the DRV will review the claims of new pensioners. Then follow after a certain Order all those who had already retired by 2020. Preference will then initially be given to all pensioners who already receive social benefits or basic income support. In addition, pensioners who have already received a pension prior to 1992 retired and a further fifth of all existing pensions should be able to be processed. Each quarter, a further fifth is then to be processed. If the plan works out, the audit will be over by the end of 2022.

Precisely because the administrative burden at the DRV is so high, it does not help possibly affected persons to file a Request for review of the basic pension supplement. For the entitlement to it is to be paid by 1. January 2023 suspended. Means: The DRV can reject such applications without giving reasons. This is to ensure that the fixed order does not get mixed up and that as a result Additional work arises.

However, the entitlements to basic pension do not expire if the review takes longer. They apply then retroactively. So the money is not gone, but comes with partly years of delay.

Hartz 4 still possible – despite basic pension: Does it really help against poverty in old age?

There is also criticism of the Calculation criteria of claims. Only those who have paid into the pension scheme for at least 33 years and earned a minimum of 30 percent and a maximum of 80 percent of the average income will receive a basic pension.

But Low-income earners, who, for whatever reason, have worked "only" 32 years and 364 days, for example, are left empty-handed. You are still entitled to the Basic pension instructed. The basic pension therefore by no means ensures greater social justice and fails to achieve its goal of combating old-age poverty, criticize employers' associations such as Gesamtmetall. The Council of Economic Experts also comes to a clear conclusion in its 2020/2021 annual report: "Overall, the basic pension is a poorly targeted instrument to Old-age poverty to be addressed."

Basic pension: administrative costs eat up a lot of money

As with the statutory pension, the basic pension is not financed solely by the contributions paid in. Therefore, the federal government must Tax funds help out. For 2021 alone, Hubertus Heil's (SPD) Ministry of Labor estimates the cost of the basic pension at 1.3 billion euros. By 2025, they could rise to 1.6 billion euros. Criticism arises in connection with these sums, especially in connection with the administrative burden.

The cost of this alone for 2021 is estimated to be around 400 million euros. Last year, DRV Director Stephan Fasshauer already pointed out the poor ratio of basic pensions to total expenditures. Usually, the DRV records administrative costs of 1.3 percent of total expenditures, according to Fasshauer. The administrative costs for the basic pension, however, "are about 24 percent of the total expenditure". Even if the administrative costs were to fall to the estimated 200 million euros annually in the following years, this would still correspond to a share of 13 percent.

Basic pension: Funding through transaction tax fails

There is criticism not only of the costs, but also of the question of the basic pension Financing in itself. Because even the tax money spent should, if one does not want to incur debts, somehow be financed in the opposite direction. Finance Minister Olaf Scholz (SPD) had originally planned to use revenues from a newly introduced Financial transaction tax provided. But with it the SPD chancellor candidate failed this year at the resistance of several EU countries.

It remains to be seen whether the new Federal government for example, through a reform of the Riester pension or the introduction of a share pension on the Swedish model, the Pension system The pensioners can be relieved in other ways in order to finance the basic pension solidly.

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