India New Delhi
+91 8860984768
support@taxbezzie.com

Old Age Pension

What Is the Old Age Pension in Germany?

The old-age pension is a monthly benefit paid to individuals who have reached the statutory retirement age and meet the contribution requirements. It is funded through contributions from employers, employees, and self-employed individuals, as well as federal subsidies.

Key Features of the German Pension System

  1. Three Pillars of Retirement Security:
    • Statutory Pension Insurance: Mandatory for most employees.
    • Occupational Pension Plans: Offered by employers as an additional benefit.
    • Private Retirement Savings: Voluntary savings such as Riester or Rürup pensions.

  2. Pay-as-You-Go System:
    • Current workers’ contributions finance the pensions of current retirees.

  3. Contribution-Based:
    • The amount of your pension depends on the length and amount of your contributions during your working life.

Eligibility for Old Age Pension

To qualify for the old-age pension in Germany, you must meet the following criteria:

  1. Reaching Retirement Age:
    • The statutory retirement age is gradually increasing to 67 years by 2031, depending on your birth year.
    • Early retirement is possible from 63 years, but with deductions.

  2. Minimum Contribution Period:
    • You must have contributed to the pension system for at least 5 years.

  3. Residence and Contributions:
    • Contributions can be made while working in Germany or other EU countries due to agreements.

How Is the Pension Amount Calculated?

The monthly pension payment is determined by:

  1. Earning Points (Entgeltpunkte):
    • You earn points based on your annual income compared to the national average income.

    Example:

    • If you earn the average income in a given year, you receive 1 earning point.
    • Higher or lower incomes yield proportionally more or fewer points.
  2. Pension Value (Rentenwert):
    • This is the monetary value of one earning point. As of 2025, it changes annually and is adjusted for inflation.
  3. Pension Formula:

    Pension Amount = Earning Points × Pension Value × Retirement Factor × Access Factor

  4. Adjustments:
    • Deductions for early retirement.
    • Bonuses for deferred retirement (working beyond statutory age).

Types of Old Age Pension

  1. Standard Old Age Pension:
    • For individuals who have reached the statutory retirement age.

  2. Pension for Long-Term Insured:
    • Available at age 63 for those with at least 35 years of contributions.

  3. Pension for Severely Disabled Persons:
    • Available earlier (from 60–62 years), with specific requirements for disabilities.

  4. Pension for Very Long-Term Insured:
    • Available at 63 for those with 45 years of contributions.

How to Apply for Old Age Pension

  1. Gather Required Documents:
    • Personal identification (passport, residency permit).
    • Proof of contributions (e.g., employment records, insurance number).
  2. Submit the Application:
    • Applications can be submitted up to 3 months before retirement age.
    • Apply through the Deutsche Rentenversicherung (German Pension Insurance).
    • You can apply through us or you can contact us for further information.
  3. Confirmation:
    • Once your application is processed, you will receive a pension approval notice with the payment details.

Taxation and Contributions in Retirement

  1. Pensions are subject to income tax in Germany. The taxable portion depends on the year you started receiving the pension.
  2. Health and nursing care insurance premiums are deducted directly from your pension payments.

International Aspects

  1. EU and EEA Countries:
    • Contributions made in EU/EEA countries count towards your German pension eligibility due to reciprocal agreements.

  2. Non-EU Countries:
    • Germany has agreements with some non-EU countries (e.g., USA, Canada) to ensure pension portability.

  3. Pension Refund:
    • Non-EU citizens who leave Germany permanently and do not meet the 5-year contribution requirement may apply for a pension refund.