Berlin.
After a long working life, old age should be financially carefree. But millions of citizens have to reckon with a small pension.
Who worked for decades and in the pension fund has paid in wishes for financially carefree years in old age. However, many employees are threatened that despite full-time employment have to live on a small pension: Around eight million employees in Germany have to reckon with receiving a net pension of less than 1,200 euros after 45 years of full-time work. That is a good third of full-time employees in Germany.
This is based on a reply from Federal Ministry of Labour to a request from the parliamentary group of the party Die Linke, which is available to our editorial team. A net pension of 1,200 euros corresponds to a gross amount of 1,348.31 euros, of which the contributions to health and care insurance subtracted from. According to figures from the Ministry of Labour, at the current pension level, employees over the age of 45 must earn at least 3,034 euros a month before deductions in order to get a statutory net pension of 1,200 euros.
Pension: Low payment despite decades of professional activity
Even more people are affected if the calculation model is based on 40 years of full-time work: Of the 21.7 million full-time employees in Germany, almost 10.3 million earn at a level that after four decades in a full-time job they have to reckon with a net pension of less than 1,200 euros – that affects almost every second person. In order to be paid exactly this amount, they would have to earn 3,413 euros gross per month.
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Pension in Germany – facts and history
- System: the statutory pension works according to the equivalence and solidarity principle.
- Annuity types: There are still those Basic, disability and survivor’s pension.
- exceptions: A large majority of the self-employed and freelancers are exempt from compulsory insurance.
- Financing: The statutory pension in Germany is fundamental pay-as-you-go.
- problems: The problems of underfunding arise mainly from the increasing aging population in Germany.
- Three pillars: the retirement provision in Germany is based on three pillars. This includes statutory, company and private pension schemes.
- Origin: She became Chancellor on July 22, 1889 Otto von Bismarck officially introduced.
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Left Party leader Dietmar Bartsch sees it as a “huge problem”. “The relationship is wrong. What employees earn is often too low and what they Pensioner getting for it is not enough,” said Bartsch of this editorial office. “The statutory pension no longer secures the standard of living for millions. That has to change.” Especially in view of the “galloping inflation”, “significant wage increases” and a gradual increase in the pension level to 53 percent are required.
Pension level: Traffic light coalition promises stabilization
The pension level is an arithmetic variable and describes the ratio of a standard pension to average earnings. The traffic light coalition has announced that it will “permanently” secure the current pension level of 48 percent. The SPD, Greens and FDP therefore want to introduce the capital-covered share pension. According to the Federal Finance Minister Christian Lindner (FDP), “a three-digit billion sum” is required for this in the medium to long term.
Also read:Retirement only at 67 – Chancellor Scholz wants fewer early retirees
The promise of the traffic light coalition to keep the pension level stable has been criticized by employers’ associations, for example. Employer President Rainer Dulger recently expressed the expectation “that we will not be able to keep the pension level at 48 percent from 2025”.
Wage increases affect pension payments in old age
The cut-off date for the Federal Ministry of Labor’s calculations on pension expectations for full-time employees is December 31, 2021. In its response to the Left Party, the Ministry of Federal Labor Minister Hubertus Heil (SPD) points out that the figures for a single year “do not show an employment career and just as little about the income situation in old age” can be inferred.
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For example, the calculation does not take into account the fact that wage increases can occur over the course of a working life. “The actual amount of the pension entitlement is only certain when the insurance biography is complete,” the ministry emphasizes.
Basic security in old age: when the pension is not enough
On the other hand, the model does not include the possibility, for example, that employees do not work full-time throughout their lives, for example because they are having children or are caring for a relative. Many employees do not even reach 45 years of contributions, for example due to illness or temporary unemployment.
If the pension is not enough to live on, those affected can apply for basic security in old age. The German pension insurance gives as a rule of thumb: If the total income is less than 924 euros, the entitlement to basic security should be checked.
Pension fund in Austria as a role model?
In view of the figures that have now become known, the Ministry of Labor emphasizes in its reply to the Left Group that the amount of the expected statutory pension “basically cannot be used to conclude that there is a need for basic security in old age”, since, for example, “further old-age income and the household context are not taken into account”. This could be, for example, rental income, income from capital investments, a private pension plan or a higher pension from the partner.
Also read:Pension: How the government wants to secure a minimum level
Bartsch calls for a fundamental change in the pension system and cites a neighboring country as a role model: “We need a pension fund like in Austria, where the average pension is 800 euros higher than here,” said the parliamentary leader of the left. “This is possible because not only employees and employers pay in there, but all citizens with an income from work – including members of parliament, civil servants, the self-employed and managers.”
However, a fundamental pension reform is not to be expected in this legislative period. The ideas of the traffic light coalition of SPD, FDP and Greens are too different on the subject.
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