As of: March 28, 2024, 1:29 p.m
By: Bettina Menzel
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Almost half of all pensioners in Germany have a monthly net income of less than 1,250 euros. But what is the maximum pension in this country? (Symbolic image). © IMAGO/Michael Bihlmayer/Bihlmayerfotografie
The amount of the pension is capped. Do top earners automatically receive the maximum? Not necessarily, because the amount of retirement provision depends on other factors.
Berlin – Almost half of all German pensioners (42 percent) have a monthly net income of less than 1,250 euros. But those who were top earners during their working life get significantly more. Where is the maximum pension in Germany – and what do contributors have to do to achieve it?
From salary to pension points: How the average salary influences retirement provision
Two factors are crucial when calculating the pension: the amount of contributions and the years of insurance. The contribution rate is currently 18.6 percent. This portion of the employee's gross wages goes into the statutory pension insurance, with the employee and employer each paying half. The salary is converted into pension points. Anyone who earns the average wage of around 43,100 euros in the West receives a pension point, also known as a salary point.
For example, if the salary is 30 percent above the German average, 1.3 salary points will be credited. But there is a limit, which is called the “contribution assessment limit”. It ends at two points. People in the West receive this with an annual gross salary of 87,600 euros. Anyone who earns more does not receive any more pension points.
Contribution assessment limits in Germany
East: 85,200 euros gross wages per year
West: 87,600 euros gross wages per year
Achieving maximum pension: Strategies for maximizing pension points
Now the second factor comes into play: the insurance years. In order to receive the maximum pension, contributors must have paid into the pension insurance continuously for at least 45 years. Suppose someone starts working non-stop at age 22. In purely mathematical terms, this person can then retire at the age of 67 and with 45 years of contributions. But how realistic is it for an employee to earn a gross annual salary of 87,600 euros over the entire contribution period of 45 years?
Starting salaries of this level are conceivable in some industries - such as lawyers - but this often requires studying, which takes more time and therefore shortens the insurance years. But there are tricks to increase your pension: Employees can, for example, voluntarily work longer and thus collect more pension points. According to the German pension insurance, this means that for every additional year of work, you get around 100 euros more in pension per month. Another option is to temporarily forego payment of the pension. This means an increase of six percent on the pension is possible for each year of waiver.
3,384 euros maximum pension with 90 pension points: How realistic is it to achieve this goal?
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Anyone who actually reaches 45 years with two earnings points and thus a total of 90 points will receive a gross pension of 3,384 euros. This is calculated using the so-called pension value, which was most recently 37.60 euros per point. After deducting taxes and social security contributions, there is less than 3,000 euros left, depending on retirement age and other factors. A look at the German pension insurance website shows how unrealistic it is to actually achieve 90 earnings points: In the pension estimator, a maximum of 60 earnings points can be selected.
Meanwhile, the aging of society is putting the German pension system under increasing pressure. The pension level should actually fall, because more pensioners are compared to fewer contributors. With a new pension package, the traffic light wants to keep the level of pension provision constant until 2040. The government is also trying to adjust various adjustments: older employees should be motivated to work longer voluntarily and the integration of refugees into the labor market should be quicker in the future. This could solve another problem: the labor and skilled labor shortage in Germany.