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PENSIONS

Why poverty among pensioners continues to rise in Germany

The number of seniors at risk of poverty has risen by one-third since 2010, new data from Germany’s Statistical Office has revealed.

Why poverty among pensioners continues to rise in Germany
Photo: DPA

According to these figures, almost every fifth pensioner in Germany – or 3.2 million people in total – is now threatened by old-age poverty, reported German broadcaster ARD.

That is 215,000 more than in the previous year, and 803,000 more people than in 2010.

The current figures stem from 2017, as data for the years 2018 and 2019 are not yet available.

While 14 percent of pensioners and retirees were still at risk of poverty in 2010, their share rose to 18.7 percent in 2017 – or almost 33 percent.

Who is at risk?

According to the statistical definition, those at risk are single people who have an income of €13,628 or less per year at their disposal.

Precarious employment, part-time work, fixed-term contracts and breaks in working life for mothers can lead to financial struggles later in life.

The proportion of pensioners at risk of poverty could furthermore rise from 16.8 to 21.6 percent by 2039, according to research published in September by the German Institute for Economic Research (DIW Berlin).

That's the case even if the economy remains in good shape, researchers say. Groups particularly affected are low-skilled workers, single people – especially women – and people who've experienced long periods of unemployment.

READ ALSO: Old-age poverty in Germany 'set to rise significantly'

Pension system under pressure

According to experts, the development is expected to intensify in the coming years.

“Old-age poverty will increase again very, very significantly in the next 10 to 15 years, because we have more and more people who work for low wages or have part-time or interrupted employment throughout their lives,” Marcel Fratzscher, head of the German Institute for Economic Research (DIW) told ARD.

The pension system is also under pressure as the population gets older. The current research uses data from 2018 that shows there are 31 people aged 67 and over in every 100 people of working age – and this could rise to 47 after the baby boomers enter retirement in 2038.

Germany is currently considering increasing the pension age from 65 to 69 in light of longer lifespans.

READ ALSO: Should Germany increase the retirement age to 69?

In ARD’s programme, several people already affected by poverty in old age had their say: They have to get by with €250 a month, and use the money to pay for food, clothing and repairs – even though they have worked all their lives.

In order to escape poverty by the time a person reaches old age, a full-time job requires a minimum hourly wage of €12, DIW head Marcel Fratzscher stated.

The minimum wage in Germany is still far from this: since January 1st, it has been €9.35.

READ ALSO: Everything that changes in Germany in January 2020

Member comments

  1. The “Baby Boomers” enter retirement in 2038? Wow – I do not – it means that they must work until they are at least 74 and possibly 98.
    Check your dates Local!!!!!

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For members

RETIREMENT

Reader question: Can I get a retirement visa for Germany?

Unlike in EU countries such as Portugal or Spain, Germany does not have a visa specifically for pensioners. Yet applying to live in the Bundesrepublik post-retirement is not difficult if you follow these steps.

Reader question: Can I get a retirement visa for Germany?
Two pensioners enjoying a quiet moment in Dresden in August 2020. Photo: picture alliance/dpa/dpa-Zentralbild | Sebastian Kahnert

Due to its quality of life, financial security and health care, Germany snagged the number 10 spot in the 2020 Global Retirement Index. So just how easy is it to plant roots in Deutschland after your retirement?

Applying for a residency permit

As with any non-EU or European Economic Area (EEA) national looking to stay in Germany for longer than a 90-day period, retirees will need to apply for a general resident’s permit (Aufenthaltserlaubnis) under which it will be possible to select retirement as a category. 

READ ALSO: How does Germany’s pension system measure up worldwide?

This is the same permit for those looking to work and study in Germany – but if you would like to do either after receiving a residency permit, you will need to explicitly change the category of the visa.

Applicants from certain third countries (such as the US, UK, Australia, South Africa, Japan, South Korea, Israel, Canada, and New Zealand) can first come to Germany on a normal tourist visa, and then apply for a residency permit when in the country. 

However, for anyone looking to spend their later years in Germany, it’s still advisable to apply at their home country’s consulate at least three months in advance to avoid any problems while in Germany.

Retirement visas still aren’t as common as employment visas, for example, so there could be a longer processing time. 

What do you need to retire in Germany?

To apply for a retirement visa, you’ll need proof of sufficient savings (through pensions, savings and investments) as well as a valid German health insurance. 

If you have previously worked in Germany for at least five years, you could qualify for Pensioner’s Health Insurance. Otherwise you’ll need to apply for one of the country’s many private health insurance plans. 

Take note, though, that not all are automatically accepted by the Ausländerbehörde (foreigners office), so this is something you’ll need to inquire about before purchasing a plan. 

READ ALSO: The perks of private health insurance for expats in Germany

The decision is still at the discretion of German authorities, and your case could be made stronger for various reasons, such as if you’re joining a family member or are married to a German. Initially retirement visas are usually given out for a year, with the possibility of renewal. 

Once you’ve lived in Germany for at least five full years, you can apply for a permanent residency permit, or a Niederlassungserlaubnis. To receive this, you will have to show at least a basic knowledge of the German language and culture.

READ ALSO: How to secure permanent residency in Germany

Taxation as a pensioner

In the Bundesrepublik, pensions are still listed as taxable income, meaning that you could be paying a hefty amount on the pension from your home country. But this is likely to less in the coming years.

Tax is owed when a pensioner’s total income exceeds the basic tax-free allowance of €9,186 per year, or €764 per month. From 2020 the annual taxable income for pensioners will increase by one percent until 2040 when a full 100 percent of pensions will be taxable.

American retirees in Germany will also still have to file US income taxes, even if they don’t owe any taxes back in the States. 

In the last few years there has been a push around Germany to raise the pension age to 69, up from 65-67, in light of rising lifespans.

READ ALSO: EXPLAINED: Could people in Germany still be working until the age of 68?

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