The German Pension System: An Expat's Guide

If you are planning on moving to Germany to live and work, and even retire, you may be worried about what you will do for income once you reach retirement age. As an expat, you may not think that you are eligible for a pension in Germany if you are not a German citizen. However, if you have been legally employed in Germany then you are eligible to receive benefits payments from the public pension insurance. As an employee in Germany, you contribute to the pension system each paycheck. All employees, including apprentices and some self-employed workers, are entitled to receive benefits from the German pension system.

When you are working in Germany, you will have contributions of 19.5 percent of your gross salary up to a certain salary level that goes towards the pension insurance. This 19.5 percent contribution is split equally between your employer and you. You do not have to do anything because the contribution is automatically deducted from your paycheck each pay period.

Typically, pensions are paid out starting at age 65, when you should be retiring from the workforce. This rule is not carved in stone though. There are some instances where you can retire at an age earlier than 65 abd begin receiving your pension payments earlier. If you prefer to work past age 65, you can also elect to keep working and receive your pension payments later in life in some instances. If you are spending your retirement in another country, you can still receive some of your pension benefits as you are entitled to what you have paid in to the system.

If you are in Germany or are simply paying attention to the German media and their stories on the pension system, then you might be worried that there will be no pension when you reach retirement age. These fears that some of the German people are having are very similar to those that Americans are having in regards to the availability of funds in the social security system in the United States. Much like the American social security system, the German pension system relies upon contributions from the working generation to pay for the payments to pensioners. It is a delicate balance that many think is in jeopardy due to low birth rates and longer life expectancies in Germany. High unemployment also seems to be taking its toll on the social security system in Germany, which leaves many people hoping for the immigration of workers to balance out this system.

Also similar to the United States, the government in Germany is suggesting that workers not plan on living on pension payments alone during retirement years. So, while you are entitled to pension payments as an expat as long as you have been employed in Germany, the system is not without its problems. For up to date information on the German pension system, you can visit the website of the Federal Ministry of Health and Social Security.