Pensions in Germany are on the rise after a long period of small increases in the average monthly income for retirees. Nevertheless, many pensioners are struggling to make ends meet and the Left Party are calling for an end to the unequal “two-tier” pension system.
Average German pension increased in 2022
Over the past 10 years, the average pension in Germany has seen, at best, minimal increases and, at worst, slow but steady decreases. Now, pensioners are finally seeing a significant and sharp increase in their average monthly income. In 2022 the pensioners received an average of 63 euros more per month than in 2021. This increase brought their average monthly income after tax from 1.089 to 1.152 euros.
Behind this 2022 average lies a gendered discrepancy; while male pensioners received an average of 1.276 euros per month (68 euros more than previously), retired women received only 1.060 euros, an increase of 59 euros.
Left Party spotlights inequality in German pension system
Despite the increases, Germany’s Left Party (die Linke) have recently set out to refocus public attention on the inequalities of Germany’s pension system.
While everyone who works in Germany is obliged to contribute a percentage of their monthly income to their state pension, a smaller number also contribute to a voluntary, private pension scheme. This, the Left Party says, leads to a “two-tier society” among retired people.
Though the aforementioned increase of 63 euros means retired people receive an average monthly pension of 1.152 euros, the Left Party has pointed out that just over half of retired people still receive less than 1.000 euros per month. In contrast, 70 percent of those who have contributed to private pension funds receive more than 2.000 euros per month.
“The findings are clear,” Left Party member Dietmar Bartsch told Augsburger Allgemeine newspaper, “at the end of a long working life, there is a two-tier society in old age.” Bartsch and his party are calling for a “general overhaul” to Germany’s pension system, whereby retirees would receive a monthly state pension of 1.200 after tax.
Thumb image credit:Ronald Rampsch / Shutterstock.com
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FAQs
In 2022 the pensioners received an average of 63 euros more per month than in 2021. This increase brought their average monthly income after tax from 1.089 to 1.152 euros.
What is the average pension in Germany? ›
In 2023, the average old age monthly pension in Germany was €1,550, according to the German Pension Insurance.
What is the future of the pension system in Germany? ›
Contributions to the pension system have been stable at 18.6% since 2018 and will remain at this level until 2027, according to the ministry. However, from 2028, contributions will increase to 20% and from 2035 to 22.3%, staying there until 2045, according to the ministry's estimates.
How much will my German pension be? ›
Your Public Pension With 4.000€ Salary
| Monthly Salary | Years Working | Net Pension |
|---|
| 4.000€ | 20 | 711€ |
| 4.000€ | 30 | 1.005€ |
| 4.000€ | 40 | 1.266€ |
Bayerische Versorgungskammer (BVK) is Germany's largest public pension group.
What is average pension in USA? ›
Retirement Income Varies Widely By State
| State | Average Retirement Income |
|---|
| California | $34,737 |
| Colorado | $32,379 |
| Connecticut | $32,052 |
| Delaware | $31,283 |
47 more rowsOct 30, 2023
The number of years worked, your age, and your average income all determine the overall pension rate. The net replacement rate of the German pension (the percentage of your average salary your pension equates to) is 53%.
What is the lowest pension in Germany? ›
As we already know, there is no minimum retirement pension in Germany, because it is difficult to specify how much it is. The average retirement pension in Germany is approx. EUR 1538 gross. From July 2023, the average retirement pension in the western federal states will increase by 3.5%, while in the east by 4.2%.
What is the German pension called? ›
The German pension system, known as the "public retirement insurance," was established over 100 years ago by Chancellor Bismarck, making it the world's first formal pension system.
What is the average Social Security check? ›
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
In Germany, retirement and pensions are liable to tax. Pensions (for officials/state workers) are taxed in full, while statutory/private retirement benefits (for everyone) are only partially taxed - the portion that is taxed is based on various factors such as when the benefits began.
What is the widow's pension in Germany? ›
Duration: Unlike the Small Widow's Pension, the Large Widow's Pension is paid to the surviving partner for life. Amount: In Western Germany, it is equivalent to 55% of the deceased's pension, and in Eastern Germany, 60%. Requirements: The eligibility requirements are more complex.
Who has the best pension in the world? ›
The Netherlands is top of the class when it comes to comparing pension systems around the world, according to a recent global pensions report from the Mercer CFA Institute. The ranking looked at more than 50 indicators and compared 47 retirement income systems, covering 64% of the world's population.
Where is the best pension in the world? ›
Globally, Netherlands took the top spot, followed by Iceland and Denmark, while Argentina was ranked last, according to the index. Global Pension Index ranked the systems on adequacy, sustainability, and integrity.
What is the richest pension fund in the world? ›
The Government Pension Investment Fund of Japan (GPIF) remains the largest pension fund, and tops the table with assets of 1.4 trillion dollars. It has held the top spot since 2002. Meanwhile, the Employees' Provident Fund of India joins as the only new participant among the top 20 funds of 2022.
What country has the highest pension? ›
The Netherlands is top of the class when it comes to comparing pension systems around the world, according to a recent global pensions report from the Mercer CFA Institute. The ranking looked at more than 50 indicators and compared 47 retirement income systems, covering 64% of the world's population.
How much money is enough to retire in Germany? ›
Example: Your optimal monthly pension income is 3.790 € based on your expected monthly income before retirement at age 67. To maintain your pre-retirement lifestyle, you need to cover a pension gap of 1.074 €.
Which countries have the best pensions? ›
The Netherlands, Denmark, and Israel have the best pension systems. The U.S. ranks far from the top. Common challenges pension systems around the world need to address include increasing the average retirement age due to rising life expectancy, encouraging more savings, and limiting access to funds before retirement.
Is it expensive to retire in Germany? ›
How Much Money Do I Need to Retire in Germany? On average, a single person spends around EUR 700 per month on living expenses in Germany, so you would need to have enough financial resources to cover your expenses around that amount and more.
