Even if the reputation of the statutory pension has suffered somewhat in recent years as a result of public debate and political reforms – for most people in Germany it is and remains the basis for financial security in retirement. On average, a pensioner receives money from the German pension insurance for almost 20 years. How much depends on the individual’s employment history. In the often 30 to 40 years before retirement, the foundation for retirement is laid. And although there are many legal requirements, you still have the opportunity to help shape your pension. So, it’s worth getting to grips with the subject in good time to get the best out of it for yourself.
We have compiled a range of information that provides an overview and an introduction to the topic. In three case studies, we go into detail about scenarios typical for professional caregivers with part-time work, reduced earning capacity pension, part-time job and partial retirement. The calculations are based on the current pension values as of 1. July 2019 have been adapted.
For further information and answering individual questions, the German Pension Insurance is primarily available. Links to this and other advice and contact points can also be found on this page.
Overview of the topic pension
The more paid in, the higher the pension
Even if the formula looks complicated at first – actually the calculation of the pension is quite simple. In the course of life, every insured person accumulates so-called earning points: During training, while working, during longer periods of illness or unemployment, as well as during periods of child-rearing or voluntary service. One earning point corresponds to the average earnings in Germany: the more you earn, the more points you collect. And the more earning points you accumulate at the end of your working life, the higher your pension will be.
Pension information gives an overview
People who are in working life usually give little thought to earning points and pension formulas. But it’s worth taking a closer look at the pension information that every insured person over 27 receives annually. It shows how many earning points you already have in your account and what pension you can expect when you retire – assuming you continue to work until retirement at roughly the same level as before.
From the age of 55, the German pension insurance sends out pension information about every three years, by which time the figures are already quite concrete. However, it should not be forgotten that inflation can significantly reduce purchasing power in old age.
Take care of account clarification in good time
It is important to take care of a so-called account clarification in time. At the age of 43, every insured person automatically receives a questionnaire. A good reason to make an appointment with the German Pension Insurance to clarify any gaps in your insurance history. This is particularly important if there have been various phases in working life – such as study, unemployment, illness, child-rearing periods. In theory, this has time until retirement – but it is usually easier to submit data and evidence if you take care of it earlier.
Retirement at 65 – that was once upon a time
For a long time it was clear: retirement starts at 65. But since 2012, the retirement age has been gradually rising to 67 years of age. Anyone born in 1964 or later must work until 67 in order to receive the so-called standard retirement pension. Only those who have worked for a particularly long time and paid into the pension fund can retire early – in some cases even without deductions.
To qualify for this "pension for those insured for a particularly long period" (also known as "pension without deductions at 63"), you must be able to prove that you have 45 years of insurance. If you have paid into your pension for at least 35 years, you can also retire at 63 – but with deductions ("pension for those insured for many years").
Think carefully about whether the money will be enough in old age
In any case, you should carefully calculate whether you can actually afford an early pension. Because contributions to health and long-term care insurance still have to be paid on the pension – and increasingly also taxes: Even today, new pensioners have to pay taxes on more than 75 percent of their pensions.
If you retire in 2040 or later, you will pay taxes on your entire pension. It may therefore be worthwhile to continue working for a while or to earn extra money in addition to your pension ("flexi-retirement"). Voluntary payments to the pension insurance fund may also be an option under certain circumstances.
Think about supplementary benefits
Younger employees in particular should make provisions in addition to their pension. Some types of state-subsidized Riester pensions can be worthwhile, especially for low-income earners with children. Employees in the public sector can benefit from the supplementary pension scheme (ZoD). In larger private companies there may be company pension models. In general, if you work a lot part-time and have not worked at all for a long time, your pension alone will hardly be enough to live on later. However, there is then the possibility to apply for basic benefits.
Danger of occupational disability
In the care sector, the risk of becoming partially or completely unable to work due to physical or mental impairments is particularly high. It is then possible to apply for a pension for reduced earning capacity. But the hurdles for this are quite high and the pension amount rather low. It is therefore worth considering a private occupational disability pension. Health-related prevention can also help you get to retirement age in shape.
Retirement provision for freelancers
Self-employed individuals – unlike employees – are generally not automatically covered by retirement plans. It is therefore all the more important to think about retirement provision in good time. There are many possibilities, even a voluntary payment into the pension insurance can be worthwhile. In any case, freelancers should seek advice in good time in order to be covered in old age. To this end, the DBfK offers its members z.B. Career counseling to.
Pension only on application
In any case, the pension is only available upon application. About three months before the planned pension date, the form (about 25 pages) should be submitted so that the money is paid on time. The pension insurance helps you fill out the form. It is advisable to make an appointment in good time, because depending on the region, the waiting time can be several weeks.
The most important questions about retirement
When can I retire?
Retire on time at 65 – those days are over. Since 2012, the age limit for the regular old-age pension has been rising gradually each year according to the year of birth:
| 1947 | 65 years and 1 month |
| 1948 | 65 years and 2 months |
| 1949 | 65 years and 3 months |
| 1950 | 65 years and 4 months |
| 1951 | 65 years and 5 months |
| 1952 | 65 years and 6 months |
| 1953 | 65 years and 7 months |
| 1954 | 65 years and 8 months |
| 1955 | 65 years and 9 months |
| 1956 | 65 years and 10 months |
| 1957 | 65 years and 11 months |
| 1958 | 66 years |
| 1959 | 66 years and 2 months |
| 1960 | 66 years and 4 months |
| 1961 | 66 years and 6 months |
| 1962 | 66 years and 8 months |
| 1963 | 66 years and 10 months |
| from 1964 | 67 years |
Can I also retire earlier?
Yes. Those who have at least 35 years of insurance can apply for the "pension for those insured for many years" and retire as early as 63. However, the pension insurance deducts 0.3 percent from the pension for each month in which the pension is paid earlier than the actual age limit for the year of birth provides for. In extreme cases, this could be 14.4 percent for a pension brought forward by four years (at 63 instead of 67).
In addition, there is also the "pension for those insured for a particularly long time". If you can prove that you have 45 years of insurance, you can apply for this early pension, which is commonly known as "early retirement at 63". The name, however, is no longer correct. Because here, too, the age limit increases gradually – up to 65, for all those born after 1963.
Can I also retire later?
Yes. No one is forced to apply for their pension on time. If you work longer, you can even increase your pension twice over. On the one hand, through the additional contributions paid by employers and employees. On the other hand by the supplement, which the pension insurance grants: Each additional month is rewarded with a 0.5 percent pension increase. Those who work one year longer thus increase their pension entitlement by another six percent.
How much will my pension be?
This is determined with the so-called pension formula. The decisive factor here is the so-called earning points, also known as pension points, which correspond to the average income of all employed persons in Germany (in 2018, this was 37.873 euros gross). Those who earn more and pay pension contributions accordingly accumulate more earning points per year, those who earn less, less. Before retirement, the number of earning points is multiplied by the then current pension value.
This pension value is adjusted every year and is based on wage increases. Currently (as of 1. July 2019), it will be 33.05 euros in the western federal states and 31.89 euros in the eastern federal states. Deductions apply if you retire earlier than required by law. The type of pension (reduced earning capacity pension) can also lead to a lower pension.
What is the pension level?
The pension level indicates the relationship between the pension and the earnings of the working person. The current average earnings and the so-called standard pension (45 years of contributions based on the respective average earnings) are compared. In recent years, the pension level has fallen steadily. This means that pensioners receive an increasingly smaller share of the average income.
The political goal is for the pension level to be at least 48 percent by 2025. However, a drop in the pension level does not mean that existing pensions will be reduced – in fact, this is ruled out by law. The pensions just do not rise as much as the income.
Can I compensate for pension reductions?
Yes. Those who plan to retire early can compensate for the impending reductions by paying contributions after the age of 50. The amount of the payment is calculated by the pension insurance company. The pension can be paid in installments or in one lump sum. If you ultimately decide against early retirement, your standard old-age pension will be increased accordingly. A refund is not possible.
Do I still have to pay taxes and contributions on my pension?
Yes. Health and long-term care insurance contributions must also be paid on pensions. Retirees pay half the contribution rate into the health insurance scheme for pensioners, which is the responsibility of most of those previously insured under the statutory scheme – the pension insurance scheme pays the other half. The pensioner pays the contribution to long-term care insurance entirely on his own.
The contributions are deducted from the pension directly before payment. In addition, taxes may be due: Even today, new pensioners have to pay tax on more than 75 percent of their pension. Those who retire in 2040 or later will pay taxes on their entire pension. However, most pensioners get off lightly thanks to the free contributions – unless they have other income in old age.
Can I earn extra money as a pensioner??
Yes, if you retire at the regular age limit, you can earn as much as you want on the side without having your pension reduced. This also applies if you have retired early but have reached the standard retirement age in the meantime.
If you retire early, you can earn a maximum of 6300 euros per year, otherwise your pension will be reduced. The same applies to "pensions due to full reduction in earning capacity. In the case of a "pension due to partial reduction in earning capacity", the supplementary earnings limit is calculated individually; it is currently at least 15.138,90 Euro.
In general, it is worth considering taking only a mini-job. No social security contributions are due for a 450 euro job. If you regularly earn more than 450 euros, you have to pay the contributions and possibly also pay taxes.
What do I do if I can no longer work for health reasons??
If you retire before the age of 2. If you were born on January 1, 1961, you have a clear advantage: If you are unable to work six hours a day in your main job or in a comparable job that you can reasonably be expected to do, you are entitled to an occupational disability pension.
Those who are younger can only apply for a reduced earning capacity pension, for which the hurdle is significantly higher than for the old occupational disability pension. The main difference is that you also have to take a job that has nothing to do with your education. Only those who can prove that they are no longer able to work at least three hours a day in any form are entitled to a pension for full reduction in earning capacity.
A pension for partial reduction in earning capacity is paid to those who can work less than six hours a day, but more than three hours. The disadvantage: This pension is also only half as high as the pension for full reduction in earning capacity – unless a suitable job cannot be found.
What do I do if the pension is not enough to live on??
Apply for basic benefits at the local social welfare office. If you receive only a small pension, you will automatically receive an application form with your pension statement. However, the social security office decides whether a claim exists. Unlike social assistance, basic income support is independent of the income of the children or parents, unless this exceeds 100.000 euros per year.
Case studies
One thing in advance: Every pension is different. As individual as a (working) biography is, as different is the calculation of the respective pension. Here are three examples typical for nursing professions to explain how a transition to retirement could look like and what needs to be considered for the regular old-age pension, the reduced earning capacity pension as well as for side jobs and part-time work for older employees.
Beate – Regular old-age pension
Beate – detailed case study on the regular retirement pension
Beate started her three-year training as a nurse in 1982 and then worked full time for. She left her job with the birth of her first child in 1988. 1992 her second child was born. When the children were out of the woods, Beate started working again in 2002, initially for eight years on a half-time basis. Since 2010, she has been working full time again as a professional caregiver.
Beate has accumulated pension points during the following periods:
| Education 1982 to 1984 | 3 years |
| 1985 to 1988 | 4 years |
| 2002 until 2010 | 8 years part-time |
| 2010 to 2019 | 9 years |
The child-raising periods are added to this:
For the first child 2.5 years (for births before 1992)
For the second child 3 years (for births from 1992)
TOTAL 29.5 years
By the regular retirement age in 2031 (at age 67), she would have earned another 12 years of work and thus 41.5 years of insurance.
However, Beate could also retire at the age of 63. Because at that time (2027) she would have accumulated 37.5 insurance years. If you can prove that you have been insured for more than 35 years at the age of 63, you can claim the "pension for long-term insured". The catch: for each month of early retirement, the pension is reduced by 0.3 percent. In the extreme case, this means 48 months (four years) times 0.3 percent, i.e. 14.4 percent less pension each month – for life. The decision to retire early – and if so, when – should therefore be well thought out and calculated through.
For the sake of simplicity, let’s assume that Beate, as a full-time employee, earned about as much as the Average employee (in 2018 this was 37.873 gross per year) – and thus has accumulated one earning point per year. During the eight years of part-time work, we assume half an earning point per year. During the training period, the state tops up the pension entitlement to one remuneration point per year. And the pension account is also topped up by one point per year during the child-raising period. For Beate, this means:
| Education 1982 to 1984 | 3 earning points |
| 1985 to 1988 | 4 earning points |
| 2002 until 2010 | 4 earning points (eight years part-time) |
| 2010 to 2019 | 9 earning points |
In addition, there are the child-rearing periods:
For the first child 2.5 earning points (for births before 1992)
For the second child 3 earning points (for births from 1992)
SUM 25.5 earning points
If Beate were to work until the regular retirement age in 2031 (at age 67), she would earn 12 additional earning points and thus in total to 37.5.
To calculate the pension in euros and cents, the earning points are multiplied by the current pension value. This pension value is adjusted every year and is based on wage increases. Currently (as of 1. July 2019), it would be 33.05 euros in the western states and 31.89 euros in the eastern states. For our calculation, we assume that Beate has worked all her life in West Germany. So, at 67 (calculated using the 2019 pension value), she would come to a regular retirement pension of
1239.38 euros per month (37.5 earning points times 33.05 pension value west).
If Beate opted for the pension at 63, she would have worked four years less and paid into the pension insurance. This means that she would only receive 33.5 earning points. In addition, her pension would be reduced by 0.3 percent per month for those four years (14.4 percent in total). So at 63 (calculated with the pension value of 2019) she would only get an old-age pension for long-term employees of
947.74 euros per month (33.5 earning points times 33.05 pension value west minus 14.4 percent).
Beate could now consider working one year longer and then get 34.5 earning points. In addition, the deductions would be reduced to 10.8 percent (0.3 percent times 36 months earlier in retirement). At 64 (calculated with the pension value of 2019), she would receive an old-age pension for long-term employees of
1017.09 euros per month (34.5 earning points times 33.05 pension value west minus 10.8 percent).
Another consideration could be to go to a half-time job and still continue to work until 67. In these four years, she would accumulate two earning points (4 times half a point) and would not have any deductions at the end because of an early pension start. At 67 (calculated with the pension value of 2019), you would then receive a regular old-age pension of
1173.28 euros (35.5 earning points times 33.05 pension value west).
Overview for Beate
regular old-age pension (full-time)
regular old-age pension (4 years part-time)
Old-age pension for long-term employees
Old-age pension for long-term employees
Marie – reduced earning capacity pension
Marie – detailed case report on the pension for reduced earning capacity
Marie was born in 1967. If she had been a few years older – namely before 2. Born in January 1961 – she could apply for an occupational disability pension. If she could then prove that she is no longer able to work six hours a day in her main job or a reasonably comparable job, she would be entitled to a pension.
However, since a change in the law in 2001, the situation has changed for everyone over the age of 2. January 1961 born clearly worsened. You can only apply for a reduced earning capacity pension, for which the hurdle is significantly higher than for the old occupational disability pension. This also applies to Marie.
Main difference: Marie must – if she can do it despite her health problems – also take on a job that has nothing to do with her training as a nurse: for example in the office or at the gate. Only if she can prove that she is no longer able to work at least three hours a day in any form, she is entitled to a pension due to full reduction in earning capacity. A pension for partial reduction in earning capacity is paid if she can work less than six hours a day, but more than three hours of. The disadvantage: This pension is also only half as high as the pension due to full reduction in earning capacity – unless no suitable job can be found.
As with the old-age pension, the amount of the reduced earning capacity pension depends primarily on the earning points acquired over a lifetime. Of course, this disadvantages young people who can no longer work full time for health reasons and who have only been able to pay into the pension fund for a few years. This is why there is the so-called additional period: since 2019, the reduced earning capacity pension is extrapolated as if the claimant had worked and paid contributions at the previous average income until the age of 65 years and eight months. This additional period will gradually increase further to 67 years in the coming years.
Because of her back problem and mental illness, Marie decides to apply for a pension for reduced earning capacity after consulting her doctors. An elaborate examination procedure begins: the pension insurance company obtains documents about Marie’s health and orders further examinations.
Doctors determine that Marie is able to work more than three hours but less than six hours a day. The German pension insurance therefore grants Marie a pension for partial reduction in earning capacity. As usual, this pension is limited to three years – after all, Marie’s health could improve again. This temporary pension is not paid until seven months after the onset of the reduction in earning capacity. Until then, Marie must live on sick pay from her statutory health insurance.
In the course of her professional life, Marie has accumulated 25 earning points in the pension insurance – despite longer periods of illness. For when receiving sick pay (up to 78 weeks), the health insurance fund also pays pension contributions, as if you were receiving 80 percent of your previous income. In addition, there are five further earning points due to the additional calculation period (extrapolation of the average income up to the age of 65 years and eight months). The basis for the calculation of the pension for reduced earning capacity is therefore 30 earning points. These are multiplied by the current pension value West. Marie thus comes to a reduced earning capacity pension of:
991,50 Euro (30 earning points times 33,05 pension value west).
However, since Marie’s pension is only one Pension due to partial reduction in earning capacity was granted, the amount is halved to
495.75 euros.
However, the following also applies to the reduced earning capacity pension: those who retire early must accept deductions. Until 2011, the age limit for reduced earning capacity pensions was 63. It increases gradually to age 65 by 2024. The current age limit in 2019 is 64 years and two months. Anyone who is younger when the reduced earning capacity pension is paid out must accept a deduction of 0.3 percent per month, but a maximum of 10.8 percent.
At 52, Marie is still a long way from the current age limit. She must therefore accept the maximum deduction of 10.8 percent and thus comes to a pension due to partial reduction in earning capacity of
442.21 euros (30 earning points multiplied by 33.05 pension value west divided by 2 minus 10.8 percent).
Marie will have to look for a job to make ends meet. Because she receives a pension for partial reduction in earning capacity, she is only allowed to work less than six hours a day (if she received a pension for full reduction in earning capacity, it would be a maximum of three hours a day). In addition to this time frame, the amount of earnings also plays a role. This annual supplementary income limit is calculated individually and is based on the income of the last 15 years before the onset of the reduction in earning capacity. However, it is currently at least 15.138.90 euros.
In Marie’s case, the German pension insurance has an additional earnings limit of 17.500 euros calculated in the calendar year. If she earns more during this time, her reduced earning capacity pension will be reduced. Assuming Marie would receive 20.000 per year, the difference to the maximum earnings limit (2500 euros) would be divided by 12 (208.33) and 40 percent (83.33 euros) would be deducted from the monthly reduced earning capacity pension. In the case of a pension due to full reduction in earning capacity, the additional earnings limit is generally 6300 euros per year.
Reduced earning capacity pensions are usually limited to an initial period of three years. It is important to apply for an extension in good time (four months) before the end of the time limit. In most cases, the time limit is repeated up to two times, so that it can take nine years until the reduced earning capacity pension is paid permanently. Only in exceptional cases is it possible for a reduced earning capacity pension to be granted permanently from the outset.