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Pension benefits raised for the first time since 2003

GERMANY - The 20 million pensioners in Germany are to see their state benefit rise for the first time since 2003, according to social affairs minister Franz Müntefering.

Speaking on German public television channel ARD, Müntefering said that on July 1, the state pension benefit would increase by 0.54% per month. For a standard benefit equalling €1,100, this means almost €6 more.

"It isn't much, but I would say it shows that the economy and with it wages are positively developing," Müntefering, a Social Democrat, said.

The increase follows three straight years where the state benefit, largely dependent on wage growth, was frozen.

But the negative political fallout from the freeze - expressed in protests from Germany's pensioner lobby - prompted Müntefering to implement a law last year which ruled out any cuts in the state benefit until 2009. The current legislative period expires in 2009.

Germany's Conservatives, who have governed with the SPD in coalition since November 2005, welcomed the benefits increase as a sign that "things are getting better in Germany".

But the liberal Free Democrats, who are in opposition, called the hike a "sham", noting that the estimated German inflation rate for 2007 was between 1.5% and 2%.

Adolf Bauer, president of Germany's Social Association, agreed with the FDP that the benefits increase was not really an increase at all. 

"If you also consider that pensioners will face a higher contribution for health insurance from April 1, the fact is that pensioners will not have more in their wallets," said Bauer.

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