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MONEY

When are people in Germany retiring?

The retirement age in Germany has been rising for years. But last year, people retired a little earlier - and they received slightly higher pensions than those who became pensioners the previous year, according to a report.

Two older people sit on a bench in Dresden, Saxony.
Two older people sit on a bench in Dresden, Saxony. Photo: picture alliance/dpa/dpa-Zentralbild | Sebastian Kahnert

Politicians and economists have been arguing that people in Germany will have to retire later in life due to the ageing society. But a new report showed German residents actually entered their retirement phase of life slightly earlier last year than the previous year. 

According to figures from the German Pension Insurance Fund, a total of 1.435 million employees retired in Germany in 2021.

On average, men retired at the age of 64.05, while in 2020 the retirement age for them was 64.07. Women retired at 64.18 – compared to 64.24 the previous year.

Despite the recent slight decline, there has been a different trend for a long time, reported German magazine Spiegel. The average time that people have been subject to pension insurance has increased by four years since the beginning of the noughties. In 2000, for instance, only 10 percent of 60-64 year-olds were subject to pension insurance, whereas recently it has climbed to more than 40 percent.

The fact that this is now changing, at least slightly, could have something to do with the increasing salaries of new pensioners. When it comes to old-age pensions, men received an average of €1,204 in 2021, compared to €1,171 net the previous year. Women got €856 in 2021 compared to €827 the year before. 

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

For reduced earning-capacity pensions, men received an average of €956 (compared to €914 in 2020) net per month, and women received €882 (€851 in 2020).

The highest average pensions were received by people who retired with the deduction-free pension after 45 years of insurance (known as ‘Rente mit 63‘ or pension at 63 in Germany). For men, the average pension payment in this case after deduction of health and long-term care insurance contributions was €1,579 per month, and for women it was €1,235.

Figures show that older people in Germany – especially the highly qualified – are increasingly working to the retirement age – and even beyond. However, many baby boomers would rather get out sooner than later. Furthermore, the retirement age can’t be postponed in some cases such as physically demanding jobs.

When calculating state pensions in Germany, the number of years worked, your age, and average income determine what people receive. 

What is the current retirement age in Germany?

The age of retirement in Germany has been slowly increasing since the year 2012, when a government reform raised it from 65 to an eventual age of 67.

Currently, the age of retirement is being raised by a month each year. People who were born in the year 1956 and celebrated their 65th birthday last year will likely have to wait until they are 10 months past their 65th birthday before they can celebrate their retirement.

Starting in the year 2024, the age of retirement will be raised by two months every year until it hits a ceiling of 67. That means that people born in the year 1964 will have to wait until their 67th birthday before they can start to enjoy their next phase of life after working. 

Germany’s ruling coalition – made up of the Social Democrats (SPD), Greens and Free Democrats (FDP) – have not agreed on pushing up the retirement age, although they are examining the issue of how to keep the pensions system afloat.

READ ALSO: Pensions: How the new government plans to solve an old-age issue

Some experts in Germany say the retirement age will definitely have to be raised further because people are living longer and there won’t be enough workers paying for pensioners in future. 

The head of the German pension insurance, Gundula Roßbach, warned months ago that politicians would have to “keep a close eye” on the development.

READ ALSO: Could people in Germany soon be working until they are 68?

Vocabulary

Pensioners – (die) Rentner

Pensions/old-age pensions – (die) Altersrenten

Reduced in earning capacity pensions – (die) Erwerbsminderungsrenten

Pension insurance – (die) Rentenversicherung

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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MONEY

Germany reaches agreement on Bürgergeld – with a couple of catches

Members of Germany’s traffic light coalition government and the opposition Christian Democratic Union party have reached an agreement in the dispute over plans for a new citizens‘ income. There will be tougher sanctions against benefit recipients and fewer discretionary assets.

Germany reaches agreement on Bürgergeld - with a couple of catches

Last week, the German government’s plans to reform unemployment benefits with its new “Bürgergeld”, or citizens’ income, proposals were blocked in the Bundesrat.

The legislation was held up mostly by members of the Christian Democratic Union (CDU/CSU) which had been strongly opposed to the proposals for a six-month Vertrauenszeit (trust period) in which benefits claimants would not incur sanctions, as well as to the amount of assets recipients would be able to hold on to.

READ ALSO: EXPLAINED: Will Germany’s controversial Bürgergeld still come into force?

On Tuesday, politicians from the traffic light coalition parties and the CDU/CSU reached a compromise on the proposed reforms which means that some of the key measures will be scrapped.

No trust period

The CDU/CSU was able to push through its demand for more sanctions for recipients and the six-month trust period will now be scrapped completely.

Instead, it will be possible to enforce benefit sanctions from the first day of an unemployment benefits claim if recipients don’t apply for a job, or fail to turn up for appointments at the job centre, for example.

The CDU and CSU also demanded that unemployment benefits recipients be allowed to keep less of their own assets when they receive state benefits. The original plan had been for assets worth up to €60,000 to be protected for the first two years, but the compromise reached has knocked this down to €40,000 for one year – during which time benefits recipients will not have to use up their savings.

Following the announcement of the agreement, Green Party later Britta Haßelmann said “I regret it very much”. According to Haßelmann, the trust period was the core of the reform designed to stop people from having to take up “just any job”.

READ ALSO: Bürgergeld: What to know about Germany’s unemployment benefits shake-up

Other traffic light colleagues were more optimistic, however. Katja Mast from the SDP spoke of a “workable compromise in the spirit of the matter,” while FDP Parliamentary Secretary Johannes Vogel said that it had succeeded in “making a good law even better”.

CDU/CSU leader Friedrich Merz, meanwhile, sees the compromise as a great success for his party, though he also praised the willingness of the parties in the government to reach an agreement.

“The coalition was very quick and – to my surprise – very largely willing to make compromises here,” Merz said. 

What happens next?

Tomorrow, the Mediation Committee of the Bundestag and Bundesrat will meet to discuss the proposals. If the agreement is confirmed, the welfare reform could clear the final hurdle when it is voted on Bundesrat again at the end of the week. According to the federal government’s plans, if it’s approved, Bürgergeld will come into force in January and replace the current Hartz IV system. 

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