The more than 21 million pensioners in Germany would receive a substantial 4.57 per cent pension increase beginning on July 1 after the German Cabinet approved the adjustment on Wednesday in Berlin.

With this increase, pensions are set to 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 Labour Minister Hubertus Heil credited to strong wage growth in Germany.

In the autumn, estimates had predicted an increase of only 3.5 per cent.

In the past two years, the pension increase had lagged behind inflation.

However, inflation in Germany has slowed, and in March, government figures showed consumer prices 2.2 per cent higher than in the same month last year.

The pension increase would apply equally to the entire country for the first time.

Historically, pensions in the former East Germany had lagged behind those in the former West.

Last year, a larger increase in the former communist East Germany equalised pensions across the country even earlier than originally planned.

That was due to faster wage growth in the former East.

Last year’s pension hike was 4.39 per cent in the former West Germany and 5.86 per cent in the former East Germany. 

(dpa/NAN)