Increase in Income Exemptions for Basic Pension Supplement Starting 2024: What Retirees Need to Know
Since the introduction of the basic pension supplement in 2021, Germany's pension system has continued to evolve to support older individuals with low incomes. A key aspect of this measure is the income assessment, which considers specific exemption amounts. As of January 1, 2024, new, higher income exemptions will come into effect, applied retroactively, representing a significant improvement for many retirees. This article outlines the key changes and their impact on the basic pension supplement.
The basic pension supplement was established to support individuals who, despite long-term employment and contributions to the pension system, receive only a small pension. To qualify for the supplement, a minimum of 33 years of basic pension periods must be documented. These include periods with mandatory contributions from employment, child-rearing, and caregiving, as well as periods during which benefits were received due to illness or rehabilitation. Periods acquired abroad may also be credited under certain conditions.
A crucial condition for receiving the basic pension supplement is that the average income during one's working life must have been less than 80 percent of the average earnings. Additionally, an income assessment is conducted, which considers specific exemption amounts. These exemptions are adjusted annually according to the previous year’s pension adjustment.
In 2023, the exemption amount for taxable income was 1,317 euros for single individuals and 2,055 euros for couples. Income exceeding these exemptions is counted at a rate of 60 percent. Income above 1,686 euros for singles or 2,424 euros for couples is fully counted against the basic pension supplement.
As of January 1, 2024, these exemptions will be increased, marking an important change for many retirees. The new exemption amount for the full basic pension supplement will be 1,375 euros for singles and 2,145 euros for married or partnered individuals. Income exceeding this exemption will be counted at a rate of 60 percent. For income above 1,759 euros for singles or 2,530 euros for couples, the excess amount will be fully counted.
These adjustments represent a significant relief for many retirees, as higher income exemptions provide greater financial security. The new exemptions ensure that more individuals can benefit from the basic pension supplement without their income being heavily counted against it.
Conclusion:
The increase in income exemptions as of January 1, 2024, marks a substantial step toward improving the financial situation of many retirees in Germany. By adjusting the exemptions, the basic pension supplement can reach more individuals who have low pensions despite long-term contributions. This measure not only supports individual financial security but also reinforces trust in the overall pension system. Retirees should be aware of these changes and consider how the new regulations might affect their eligibility for the basic pension supplement.