As of: February 3, 2024, 4:49 a.m
By: Fabian Hartmann
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For many pensioners in Germany, their pension payments are barely enough to cover their living expenses.
But how high does the salary have to be?
Kassel – Many pensioners in Germany are dependent on additional income in addition to their actual pension.
Because many of them do not receive enough pension to be able to support themselves.
42.3 percent of pensioners in Germany have to get by with a monthly net income of less than 1,250 euros, according to calculations by the Federal Statistical Office when asked by Bundestag member Dietmar Bartsch (Die Linke).
This affects around 7.5 million retired people, including more than 5.2 million women.
A total of 26.4 percent of pensioners in Germany are entitled to a pension of less than 1,000 euros per month.
Here, too, it affects more women than men: 36.2 percent of female pensioners receive less than 1,000 euros per month, while 13.9 percent of pensioners receive it.
According to the German Pension Insurance Pension Atlas 2023, men received an average gross pension of 1,728 euros in 2022.
Women received an average of 1,316 euros.
However, contributions for health and nursing care insurance are still due.
This allows employees to calculate their potential pension
In order to be provided for in old age, employees should take care of a suitable form of retirement provision in good time.
A look at the salary can also help to provide guidance about the potential pension.
But how much should employees earn in order to be provided for in retirement?
And for whom is which type of pension most suitable?
The pension formula of the German Pension Insurance can help to estimate what pension level employees can expect in old age.
It is made up of the multiplication of the following factors:
salary points x access factor x current pension value x pension type factor = pension amount per month
Pay points
are considered the most important value of the invoice.
They depend on the income level of the employees.
For this purpose, individual incomes are compared every year with the average gross annual salary of all people who pay contributions into the German pension fund.
A salary point of 1.0 corresponds exactly to the gross average salary.
If you earn twice as much as the average, your salary point is exactly 2.0.
In 2023, the annual average salary was 43,142 euros in the west and 41,967 euros in the east.
The access factor is between 0.86 points and 1. The earlier the retirement age, the lower the factor.
The current pension value is the equivalent value, which corresponds to one earnings point.
It will be adjusted to the economic situation - in West and East Germany it is currently the same at 37.60 euros.
On the other hand, the pension type factor is fixed: It determines the security objective of the pension type in relation to a retirement pension and is between 0.1 and 1. For example, for old-age pensions and pensions due to full incapacity, the factor is 1. For pensions due to partial incapacity, it is 0.5 and with half-orphan's pension 0.1.
The salary should be this high so that pensioners are protected in old age
Whether the pension is sufficient to cover living expenses depends on several factors.
In addition to the type and age of pension, this also includes price developments, the situation on the housing market and energy prices.
But savings and additional forms of retirement provision can also contribute to a secure living in old age.
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For guidance, the pension insurance company sends employees an up-to-date pension status every year.
It lists the pension you can expect, provided you continue to work as usual and pay into the pension fund.
The pension amount that you have already achieved is also listed.
Otherwise, you can also consult the German pension insurance pension formula.
As an example: If you earn exactly the average salary of 43,142 euros over a 45-year working life in West Germany, you will end up with 45 pension points.
If one assumes neither additions nor deductions, the access factor is 1. And the pension type factor is also 1 if one assumes the old-age pension.
If you multiply 45 earnings points by the pension value of 37.60 euros, this results in a pension of 1,692 euros per month.
Which retirement provision is best suited for whom?
A YouGov survey commissioned by the insurance group Axa from September 2023 shows: one in three adults in Germany does not make provisions for old age.
However, many pensioners rely on additional insurance.
But how do you find out which type of retirement provision is right for you?
Private pension insurance is considered a classic.
However, some experts now advise against it.
Because high costs, non-transparent investment models and low interest rates often make these pension insurance policies unattractive.
“In the payout phase, the insurers calculate with such a high life expectancy that some pensioners have to be over 100 years old in order to get their money paid out,” explains Merten Larisch from the Bavarian Consumer Center to the
editorial network Germany
(RND).
Seniors taking a walk © IMAGO
In contrast, some experts are now criticizing the Riester pension.
According to them, this almost never leads to the promised return.
Nevertheless, the Riester pension can be worthwhile for some employees, because employees with several children in particular could benefit from the Riester pension.
There are also a number of other retirement planning options that employees can use to have more money in retirement in addition to their pension income.
These include company pension schemes or the purchase of pension points.
There could also be good news for pensioners at the moment: the pension increase planned for July does not seem to be in danger.
In addition, Federal Economics Minister Robert Habeck (Greens) is also planning this year to increase the incentives for people to continue working after they reach retirement age.