German retirees will get a pension increase that beats inflation. What to know

Germany’s Cabinet on Wednesday approved a 4.57 per cent rise in retirees’ pensions from this summer, well above the current rate of inflation.

Rises in German pensions are linked largely to wage developments. Although inflation has subsided over the past year, the outcome of recent salary negotiations in various sectors has reflected demands for hefty pay rises following a big increase in living costs.

The increase will take effect on July 1, the first time since 2000 that pensions in Europe’s biggest economy have risen by more than the annual inflation rate, which in March stood at 2.2 per cent, German news agency dpa reported.

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An increase last year of 4.39 per cent in the former West Germany and 5.86 per cent in the less prosperous and formerly communist east completed efforts to bring pensions in the two parts of the once-divided country level more than 30 years after reunification.

Germany has a population of 84 million, including more than 21 million retirees.