German pensions to rise by more than 3 percent this year

MarketsAssociated Press

The German government says pensions will rise by more than 3 percent this year as a result of higher wages in Europe's biggest economy, an increase that is well above the country's inflation rate.

The Labor Ministry said Tuesday that pensions will increase by 3.22 percent in the former West Germany on July 1 and 3.37 percent in the formerly communist east. Germany's annual inflation rate was 1.4 percent in February.

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Rises in German pensions are linked to wage developments. The country has seen some strong wage increases recently amid healthy economic growth.

The latest increase will bring pensions in the less prosperous east to 95.8 percent of those in the west, which is home to most of Germany's population. The gap is supposed to be eliminated altogether by mid-2024.