German pensions to rise again, but slower than inflation

But it will finally bring pensions in the less prosperous east up to the level of those in the west, which is home to most of Germanys population, after years of efforts to narrow the gap.AP RUP

German retirees' pensions will rise significantly this summer for the second consecutive year, the government said on Monday, though the increase will still fall short of the current inflation rate.

The Labor Ministry said pensions will increase by 4.39 per cent in the former West Germany on July 1 and by 5.86 per cent in the formerly communist east. That will follow increases last year of 5.35 per cent in the west and 6.12 per cent in the east.

Rises in German pensions are linked largely to wage developments. Inflation has added to upward pressure on wages; salary negotiations in various sectors lately have seen high demands and in some cases hefty increases.

Germany's annual inflation rate stood at 8.7 per cent in February, unchanged from January.

The latest pension increase falls short of that. But it will finally bring pensions in the less prosperous east up to the level of those in the west, which is home to most of Germany's population, after years of efforts to narrow the gap.(AP) RUP