Germany: Introduction of a Basic Pension for Low-Income Pensioners

Submitted by mmarquez on Thu, 07/30/2020 - 11:57

Deutsche Rentenvrsicherung (02.07.2020) On July 2, Germany’s parliament approved a law that will introduce an income-tested basic pension (Grundrente) on January 1, 2021, to supplement the country’s social insurance old-age pension (beneficiaries should have at least 35 years of basic-pension years of contributions). This new program is intended to reduce the risk of old-age poverty among individuals who had below-average earnings in their working lives or spent considerable time outside the labor force. The program is expected to benefit roughly 1.3 million pensioners in Germany, including many women (around 70 percent of the potential beneficiaries) and pensioners in eastern Germany, and is estimated to cost €1.3 billion (US$1.46 billion) per year beginning in 2021. The government will finance the total cost of the basic pension by increasing its subsidy to the social insurance program. 

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