Pension
The old-age pension scheme is based on three pillars. The statutory old-age pension is the most important component of the old-age security system. In general, contributions are borne by the employee and the employer, who each pay half of the contributions. Germans usually have additional company pension schemes administered by their employer, and some also subscribe to private retirement savings plans.
Insured persons who have reached the retirement age, can claim the statutory old-age pension. Since 2007, the statutory retirement age has been increasing to match the aging of the German population. The retirement age has been gradually rising from 65 from 2012 and will reach 67 by 2031. The minimum age is 65 for people born before January 1, 1947, and 67 for people born in 1964 or later. For people born between 1953 and 1964, the retirement age is incrementally higher for each year closer to 1964.
The amount of the individual pension depends primarily on the amount of the insured wages and income from work during the insurance life.
Dependents/Survivors Benefits
In Germany, a person is entitled to a widow or widower's pension under the following conditions:
- If the deceased spouse or partner in a registered civil partnership had completed the general qualifying period of five years
- If the marriage lasted at least a year
- If the surviving spouse has not remarried
The amount of the pension is a percentage of the deceased spouse/partner's full statutory pension and depends on the surviving spouse's revenue. The maximum widow's benefit amount is 55% of the deceased spouse's pension.
Dependent children of the deceased spouse benefit from an orphan's pension up to the age of 18. It can be extended until 27 for orphans who are still studying, or are in vocational training, in an interim period for less than four calendar months between two phases, or performing voluntary service.
Invalidity Benefits
Victims of work-related accidents or illnesses receive occupational accident insurance injury benefits as long as they are unable to work and receive no salary. The injury benefit is 80% of the person’s gross pay and is granted for a maximum of 78 weeks.
If an occupational accident or disease reduces the person’s earning capacity by at least 20% for 26 weeks, they are entitled to a pension. The amount depends on the reduction of the person’s earning capacity and the income they earned over the 12 calendar months preceding the occupational accident or disease.
A complete loss of earning capacity will trigger a full pension of two-thirds of the gross annual earnings before the accident or disease. In case of a loss of earning capacity of 50%, the pension will represent one-third of the previous gross earnings.