German state pensions
German State Pensions
Participation in the German state pension scheme is mandatory for all permanent employees in Germany.
The system is "pay as you go". This means that the contributions are deducted from your salary each month. Usually you won't even be asked, or perhaps even be aware that this is happening. It is all handled automatically by your employer. Check your payslip for the deduction labelled something like "RV-Beitrag". The "RV" stands for "Rentenversicherung" which literally translates to "retirement insurance".
Exceptions for International Workers
Participation is mandatory regardless of nationality. If your salary is being paid in Germany, and you are paying German taxes, then you must also pay the state pension contributions.
An exception is made if you work for an international company and that company transfers you to Germany for less than 5 years. This is called a "detached worker".
The contribution rate is currently 19.5 percent of the gross salary (gross = total salary before tax). This contribution is shared equally between employee and employer. This means the employee pays 9.75% of their gross salary and the employer pays the same.
Self-employed workers, with the exception of Ich-AG claimants, are not legally obliged to contribute to the state pension fund. If they choose to contribute, however, they must pay the full amount entirely themselves. Self-employed workers who claim the Ich-AG are obliged to contribute the full amount themselves.
Self Employed English teachers are required to contribute on their profit (turnover - business_expenses)at the same rate.
State pension benefits are paid out on retirement. This begins at age 65 for both males and females. You must have contributed into the system for at least 5 years in order to qualify for benefits.
The benefits paid out are about 70% of the average net income you earnt whilst working. The exact amount paid out depends on how much you put in and for how long. There are numerous other factors as well.
As an example, assuming you work from the age of 25 to 65, with an average yearly salary of €50k, your monthly pension benefits will be about €800.
Use one of the following pension calculators to estimate what your benefits will be:
Rules for the Self Employed
The state pension is also compusory to some groups of self-employed workers, but not all. The groups who are obliged to participate include: teachers, midwives, forestry workers, craftsmen, artists, fishermen, the self-employed who work for only one client, and those participating in the Ich-AG scheme
Refunds on leaving Germany
If you work in Germany for less than 5 years, you can claim back your state pension payments. More details here: Pension refunds on leaving Germany
Recognition of contributions from abroad
If you have made contributions to a state pension scheme elsewhere, you should register those to make sure you'll get the full amount when you retire. More details here: Mutual recognition of pension contributions
German State Pensions Head Office
The German pensions system is managed centrally from Berlin. This office is called the "Bündesversicherungsanstalt für Angestellte" and is abbreviated to the "BfA". Here is the address:
Bündesversicherungsanstalt für Angestellte
Tel.: +49 (0) 30 8651
Private and Company Pensions
For more info about other options beyond the state pension scheme, see...
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