More than 21 million pensioners in Germany will receive a substantial pension increase of 4.57% from July 1, after the German cabinet approved the adjustment in Berlin on Wednesday.
With this increase, pensions will rise faster than inflation in the country. The last time pensions rose faster than inflation was in 2000.
The increase is larger than originally predicted, which Labor Minister Hubertus Heil attributed to strong wage growth in Germany.
In the fall, estimates had predicted an increase of just 3.5%.
Over the past two years, pension increases lagged behind inflation. But inflation in Germany has slowed and in March government figures showed consumer prices were 2.2% higher than the same month last year.
The pension increase applies for the first time to the entire country. Historically, pensions in the former East Germany have lagged behind those in the former West.
Last year, a bigger increase in former communist East Germany equalized pensions across the country even earlier than originally planned. This was due to faster wage growth in the former East.
Last year’s pension increase was 4.39% in the former West Germany and 5.86% in the former East Germany.
