Work in Germany. Pension in Germany 2024. For many, retirement feels distant, but it’s a pressing concern for others. Understanding how much you need to earn for a desired pension isn’t as complex as it seems. Here is the German pension calculation formula to determine the earnings required for a monthly pension of EUR 1,500.
1,500 euros pension in Germany
The German pension system is structured around multiple pillars. Workers in Germany contribute to mandatory social security schemes, building capital for their future. Additionally, there are supplementary pension programs where individuals, either independently or through workplace schemes, make extra contributions to enhance their State Pension. These various models constitute the three pillars of the German pension system.
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By the end of 2020, men residing in western Germany typically received €1,172 gross in monthly pensions, whereas women received only €741. In eastern Germany, men received approximately €1,249, while women received €1,065. The pension amount in Germany is influenced by six factors: earnings, the level of insurance contributions paid, length of service, the retirement coefficient, accumulated pension points (known as “Entgeltpunkte”), and the pension value factor (“Rentenwert“).
Monthly pension amount = pension points x access factor x current pension value factor x retirement moment factor.
The key factor determining your pension is earning points, which are determined yearly based on your income. If your earnings in a specific year align with the average earnings of all citizens, it equals, for instance, 1 earning point. However, various other factors impact your actual pension amount, including inflation, unemployment, and whether you reside in East or West Germany.
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How much do you have to earn to receive EUR 1,500 pension in Germany?
To receive a pension of EUR 1,500 in the future, individuals must accrue 43.87 earning points in western Germany and 44.82 points in eastern Germany. However, achieving this requires a high income, even from a young age. Assuming the future retiree pays contributions for 45 years, they must accumulate 0.97 and 1.0 earning points per year, respectively. Translated into gross salary, this implies earning slightly below the average annual salary in the West and exactly the same as the average salary in the East.
- 3,144 euros per month in the West
- 3,111 euros per month in the East
Only at this level of earnings is it possible to receive a monthly pension of PLN 1,500. euro.
Pension in Germany: Current information
To address challenges posed by an aging population and a financially strained pension system, the German federal government has implemented multiple reforms since 2002. These reforms aim to ensure the long-term sustainability and affordability of the pension system. Measures include incrementally raising the statutory retirement age and reducing the maximum state pension amount. The average retirement age in Germany currently stands at 64.4 years. As per the spokesperson of the German pension insurance system (communication dated May 30, 2023), the average retirement age rose to this level in 2022, compared to 64.1 years in 2021. By 2031, the retirement age will increase to 67 years. However, individuals who have paid pension contributions for 45 years will be eligible to retire at the age of 63, with exceptions.