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Private Pension Insurance
general pension insurance
General Pension Insurance: Your Guide to a Secure Future
The general pension insurance is a cornerstone of your retirement plan, yet many people are not familiar with the details. This article clearly explains how it works and shows you how you can maximize your entitlements. Secure important knowledge for your financial future now.
The topic in brief and concise terms
The general pension insurance is the foundation of old-age provision in Germany, financed through the pay-as-you-go system and federal subsidies.
The contribution rate remains stable at 18.6 percent (9.3 percent each for employees and employers), and the standard retirement age is gradually increasing to 67 years. [__2,__1]
In addition to old-age pensions, there are also disability and survivor pensions as well as rehabilitation benefits; early planning and review of one's own entitlements is crucial. [__3,__7]
Quick Facts: The essentials of the general pension insurance at a glance
The general pension insurance is the central component of retirement provision in Germany. It provides financial security for millions of citizens. Here are the key points in brief:
Mandatory insurance: For most employees, insurance is compulsory. Certain self-employed individuals and other groups are also mandatorily insured.
Contribution rate: The contribution rate for general pension insurance has been stable at 18.6 percent of gross income since the first of January 2018. Employees and employers each share this contribution equally, at 9.3 percent each.
Benefits: The main benefit is the old-age pension. There are also pensions for reduced earning capacity and survivors' pensions (widows', widowers', and orphans' pensions). Rehabilitation measures are also part of the benefits spectrum.
Financing: It is based on the pay-as-you-go system, supplemented by federal grants that cover around 30 percent of expenditures.
Retirement age: The standard retirement age is gradually being raised to 67 years. For those born in 1964 and later, it is set at 67 years.
These basics form the foundation for understanding your personal retirement provision. In the next section, we will delve into the practical aspects.
Praxis-Teil: Understanding Contributions, Pension Calculation and Examples
To better assess your future pension, understanding contribution payments and pension calculation is essential. Contributions to the general pension insurance are collected up to the contribution assessment ceiling. In 2024, this was 7,550 euros per month in the old federal states. [__2,__2]
The pension formula to calculate your monthly gross pension is: Pension Points x Entry Factor x Current Pension Value x Pension Type Factor. [__5,__5] You accumulate pension points according to your income level relative to the average income of all insured persons. [__5] An income equal to the average earnings (provisionally 50,493 euros for 2025) results in one pension point. [__5] The current pension value is 37.60 euros (as of July 2023). [__5]
An example: Suppose you have accumulated 45 pension points, retire regularly (entry factor 1.0) and receive an old-age pension (pension type factor 1.0). Your monthly gross pension would be: 45 x 1.0 x 37.60 euros x 1.0 = 1,692 euros. [__5] Many underestimate how significantly even small deviations in pension points can impact the later pension. A private pension insurance can be a sensible addition here. Therefore, a thorough examination of your pension information, which you receive annually from the age of 27, is very important. [__5] Next, we will examine the situation for the self-employed.
Special Case Self-Employed: Mandatory or Optional in the General Pension Insurance?
For self-employed individuals, the situation regarding the general pension insurance is often more complex. Some professional groups are legally required to be insured. [__4,__4] This includes, for example, craftsmen (registered in the trade register), teachers, educators, healthcare professionals, artists, and journalists. [__4,__4] They generally must report to the pension insurance provider within three months of starting their activity. [__4]
Other self-employed individuals can voluntarily insure themselves in the general pension insurance or apply for compulsory insurance. [__4,__4] In 2024, the voluntary contributions could be chosen between the minimum contribution of 100.07 euros and the maximum contribution of 1,404.30 euros monthly. [__2,__4] The decision for or against voluntary insurance should be well-considered and take individual life planning into account. A pension insurance for the self-employed offers various options. Contributions can increase the future pension or even establish a pension entitlement in the first place. [__2] Now let's delve into the expert depth with important paragraphs and rulings.
Expert depth: Key paragraphs, current rulings, and design tips
For a deeper understanding of the general pension insurance, certain legal aspects and current developments are relevant. The Sixth Book of the Social Code (SGB VI) forms the main legal foundation for statutory pension insurance in Germany. [__4,__6] § 35 SGB VI, for example, defines the standard retirement age. [__8]
Current court rulings can also affect pension claims. For instance, the Federal Social Court (BSG) decided on 5 April 2023 (Ref. B 5 R 4/22 R) regarding the consideration of training periods. [__6] A judgment from the Social Court of Ulm dated 24 June 2024 (Ref. S 10 R 1445 /23) dealt with the obligation of pension insurance providers to provide information. [__6] Such decisions highlight the complexity of pension law.
Our expert tip: Carefully check your annual pension statement for completeness and any possible gaps. [__7] Absences, for example due to training or childcare, can sometimes be reported afterwards or compensated through voluntary contributions. [__7] Additional contributions for school and study periods can only be made up to the age of 45. [__7,__7] Also consider whether a Riester pension or Rürup pension is a worthwhile additional provision for you. Knowing these details can help you actively shape your retirement planning.
Retirement age: When can you retire?
The age at which you retire is a crucial factor in determining the amount of your pension from the general pension insurance. The standard retirement age, the age at which you can retire without deductions, is gradually being raised in Germany. [__8] For those born before 1947, it was 65 years. [__8] For subsequent birth years, it increases gradually. For example, someone born in 1961 reaches the standard retirement age at 66 years and six months. [__8]
For everyone born in 1964 or later, the standard retirement age is 67 years. [__8,__8] However, there are exceptions and ways to retire earlier, often with deductions. The "pension for those with very long insurance contributions" allows a deduction-free retirement after 45 years of insurance, commonly referred to as "retirement at 63," although the exact age limit also depends on the year of birth. [__7] The average retirement entry age in 2023 was 64.4 years. [__8] It is advisable to plan carefully, taking into account the three tiers of retirement provision. Knowing your individual standard retirement age is essential for planning your retirement.
Additional services of the general pension insurance
Besides the well-known old-age pension, the general pension insurance offers other important benefits that often receive less attention. This includes the disability pension, should you no longer be able to work or only be able to work in a limited capacity due to health reasons. [__1,__3] The amount of this pension depends on your previous contributions and the degree of disability. Since 2018, the credit period has been gradually extended, which can lead to higher disability pensions. [__6]
Survivors are also secured by the general pension insurance. There are widow's or widower's pensions as well as orphan's pensions. [__1,__3] The amount of the large widow's/widower's pension is usually 55 percent of the deceased's pension. [__3] Additionally, the pension insurance provides benefits for medical and occupational rehabilitation to maintain or restore earning capacity. [__1,__3] These rehabilitation benefits can be claimed, for example, after a serious illness or accident and often include retraining. Knowledge of these diverse benefits, such as the survivor's pension, is crucial for comprehensive protection. In this way, the core areas of the general pension insurance are covered.
Conclusion and Outlook: Actively Shaping Your Retirement Planning
The general pension insurance is and remains a fundamental pillar for financial security in old age for millions of people in Germany. [__1] The system is based on solidarity and the generational contract but faces the need for adjustments due to demographic changes. Relying solely on the statutory pension is often not enough for many to maintain their accustomed standard of living. [__1] Therefore, it is all the more important to understand how the general pension insurance works and actively shape your own provision. Use the annual pension statement as a basis for your planning and explore ways to optimize your entitlements, such as closing contribution gaps or utilizing child-raising periods. [__7]
Remember that the statutory pension should often only be one component of your overall retirement plan. [__7] Supplementary private or occupational provisions are usually essential. Gather comprehensive information about your options, for example, regarding the tasks of the pension insurance or the difference to life insurance. Proactively engaging with your retirement planning enables you to enjoy a more worry-free retirement.
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive concrete suggestions for optimization.
More useful links
The German Pension Insurance provides general information on the German pension system.
Find out from the German Pension Insurance how your pension is calculated.
The German Pension Insurance provides information on the taxation of pensions.
Use the online services of the German Pension Insurance for your queries.
Destatis (Federal Statistical Office) provides information on the number of statutory pension insured people in Germany.
The German Pension Insurance offers statistics and reports on the German pension system.
A press release from Destatis (Federal Statistical Office) provides current pension-related statistics.
Destatis (Federal Statistical Office) publishes time series data on the amount of pension benefits.
The Statistikportal.de is the central statistics portal for Germany.
FAQ
What is the general pension insurance?
The general pension insurance is a branch of the German social insurance system and primarily serves to provide retirement security for employees, certain self-employed individuals, and other groups of people. It provides old-age pensions, disability pensions, and survivor's pensions.
How is my pension calculated?
Your pension is calculated using the pension formula: earnings points x entry factor x current pension value x pension type factor. The earnings points are based on your insured income in relation to the average income. [__5,__5]
Can I enhance my statutory pension?
Yes, there are several options. You can make voluntary contributions (e.g., for training periods up to the age of 45), have child-rearing periods credited, or increase your pension entitlements by working longer beyond the regular retirement age. [__7,__7]
What benefits are included alongside the old-age pension?
The general pension insurance also offers pensions due to reduced earning capacity, survivor's pensions (widows', widowers', and orphans' pensions), and services for medical and occupational rehabilitation. [__1,__3]
What is the regular retirement age?
The regular retirement age is the age at which you can retire without deductions. It is gradually being raised from 65 to 67 years. For those born from 1964 onwards, it is set at 67 years. [__1,__8]
Do I have to pay into the general pension insurance as a self-employed person?
Certain groups of self-employed individuals (e.g., craftsmen, teachers, artists) are required to be insured. [__4,__4] Other self-employed persons can make voluntary contributions or opt for compulsory insurance upon request. [__4]
