Pension Increase: Three Million Retirees to Benefit from Dual Boost

As of July 1, 2025, retirees in Germany will see a significant increase in their pensions, with a rise of 3.74 percent. This adjustment will elevate the value of an earnings point from 39.32 euros to 40.79 euros monthly. In addition to this enhancement, three million beneficiaries will also enjoy an increase in their supplementary pension allowances.

The pension adjustment will provide retirees with a more substantial income, as the German Pension Insurance (DRV) has announced this change. Specifically, the supplementary allowance, which has been in effect since July 2024, will also see an increase alongside the regular pension payments. This allowance is granted to individuals receiving reduced earning capacity pensions, which are linked to subsequent old-age and survivor pensions.

The supplementary allowance benefits those receiving pensions due to partial or full disability, with eligibility for those whose pension began between 2001 and 2018. For example, individuals who entered the disability pension system between January 2001 and June 2014 receive an additional 7.5 percent. Meanwhile, those whose pensions commenced from July 2014 to December 2018 receive an additional 4.5 percent. Payments are processed automatically, occurring between the 10th and 20th of each month, independent of the pension payment date.

With the upcoming pension increase on July 1, 2025, the supplementary allowance for three million retirees will also climb by 3.74 percent. This dual increase means that those affected will see an uptick not only in their regular pension but also in the supplementary funds they receive. Both components will reflect the same percentage increase.

The increase in pensions is calculated based on the wage development of employees, with the nominal wage index indicating a rise of 5.4 percent in gross wages. However, due to a dual cap system in place, the increase for pensions is set lower at 3.74 percent.

So, what does this mean for retirees? For instance, a retiree receiving a monthly pension of 1,000 euros, which began in 2013, currently receives a supplementary allowance of 75 euros, representing the 7.5 percent increase. With the new pension adjustment, the base pension will increase by 37.40 euros, bringing the total to 1,037.40 euros. The supplementary allowance will rise by approximately 2.81 euros, resulting in a new total of 77.81 euros monthly. Consequently, this retiree's total income will reach around 1,115.21 euros per month.

It is important to note that this calculation for the supplementary allowance will remain valid until the end of November 2025. From December onwards, retirees will receive this allowance combined with their pension payment in one sum, based on their individual earnings points.