Pension After Only 4 Years in Germany

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I am a USA/German dual citizen and I lived and worked in Germany Between 2015 and 2019. I recently moved to the UK.

Therefore I spent 4 years paying German state pension insurance through my employer.

 

I know that it takes a minimum of 5 years (20 months) of contributions to become vested in the pension system and since I am below that, I can request to have my contributions refunded, so I'm wondering if that makes sense for me.

 

 

1. Would I get the full reimbursement for my contributions?

2. Could I go back to Germany, work for one more year and become vested?

3. What determines how much someone receives after pension age?

 

 

Any advice would be greatly appreciated!

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I think it depends to some extent on what you intend doing with the rest of your working life. 

 

If you plan on working in other EU countries or the UK (subject to quite how Brexit ends up influencing state pension rules between the UK and the EU - at the moment I think the rules will continue to apply but let's see what December brings), time worked in all of those countries counts towards pension entitlement in each of them.  So, if you work for, say, 8 years in Austria, then together with your 4 in Germany you would have more than the minimum 5 years required to get a German pension at pension age.  You would also have 12 years towards whatever is the minimum in Austria.  You would then get a pension from each country based on their rules - the calculations are quite complex but can be quite beneficial because they do a calculation based solely on your German years and on your total years and give you the higher amount. 

 

If you did 31 years in Denmark then you would have 35 years in total and would qualify for the German pension at 63 (actuarially reduced by 0.3% per month) rather than whatever is your state pension age.  The German rules can also take account of post 17 years of age education if you apply and provide relevant documentation.  I am not sure whether that would take you over the 5 year requirement but I am sure someone on here will have the answer.  You can of course return to work in Germany at some point before retirement and those future years would be added to the 4 you already have.  That said, governments can change the rules between now and whenever your "then" is...

 

In simple terms the German pension is based on the number of qualifying years "Wartezeit" and whether you earned the government measured average salary each year, more or less.  If you earned the average for a year you get 1 point; if you earned more, you get more than one point etc.  So, if you had 5 years and earned above the average you might end up with, say 7 points.  Each point equates to 34.19 € per month (from July 2020 for the old "west German" states), so, 7 points times 34.19 would equate to 239.33€ per month (in today's terms), taxable in Germany. 

 

I spent 8 years in Germany and have about 12 points - I am keeping a keen eye on what Brexit will mean for my pension...  If the rules remain as they are, then I can apply for my pension at 63 as my German and UK years exceed 35 years, whereas under the German-only rules I cannot apply at 63 as I have only 8 years.

 

If you plan to return to the US, then you'll need to look at what that means for the 4 years in Germany.  

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2 hours ago, IanMKahn said:

1. Would I get the full reimbursement for my contributions?

 

No. Well, depends what you mean by 'my contributions'. You would get back half of what was paid in, or 'your' half of the amount paid into the DRV, but not the employer's contributions on your behalf. That stays in the pot. 

 

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2. Could I go back to Germany, work for one more year and become vested?


 Yes.

 

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3. What determines how much someone receives after pension age?


Points system as explained above, but it's taxable (to a limited extent) so it's dependent on fine details, what you file in a tax return, etc., and subject to some change besides. How old are you? If you can figure out the pending pension implosion everywhere, your name will be remembered for centuries.

 

It is also possible to make voluntary contributions to top-up your points (as explained above), though you will want to talk to someone from the DRV to figure that out. Also if you studied in Germany, anything after the age of 17 counts as well. Ausbildung, university, foreign semesters, etc. 

 

1 hour ago, GaryC said:

If you plan to return to the US, then you'll need to look at what that means for the 4 years in Germany.  

 

Canada-Germany have a pension cooperation plan (Agreement on Social Security) and I assume the US has similar...

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Those years of study do not apply only to years studied in Germany.  My wife and I had our years of UK study added too.  Whether that applies only in relation to EU countries or others too is not known but again, DRV could help.

 

While the actuarial reduction rules in Germany are quite generous (3.6% per year compared to about 5% in most cases elsewhere), the voluntary contribution rules are less so.  I cannot remember the detail but while in the UK you need to liver for about 3.2 years to recoup your investment in voluntary National Insurance contributions, in Germany it is more like 15 or 17 (I think - I looked into it at one point and decided against because of those sorts of timescales) BUT, as you need only to add 1 year (at most) to make your 4 existing years yield a pension it is certainly worth looking at.  When to make that sort of investment would depend very much on your current age and your future plans as noted above.  

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12 hours ago, IanMKahn said:

I am a USA/German dual citizen

 

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1. Would I get the full reimbursement for my contributions?

 

German ( as well as EU) citizens are not eligible for pension reimbursement. 

 

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2. Could I go back to Germany, work for one more year and become vested?

 

Sure, but it is not necessary. Your contributions in other countries with which Germany has an SSA can be used to vest your German pension (foreign contributions do not influence the amount of your future German pension).


 

 

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Thanks so much for your answers. This helps a lot.

 

I logged onto the DRV website today by scanning my German ID with my smartphone to check my account. Very surprised by this level of technological innovation in Germany!

 

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20 hours ago, GaryC said:

I spent 8 years in Germany and have about 12 points - I am keeping a keen eye on what Brexit will mean for my pension...  If the rules remain as they are, then I can apply for my pension at 63 as my German and UK years exceed 35 years, whereas under the German-only rules I cannot apply at 63 as I have only 8 years.

 

I also currently live in the UK. I moved in June of last year.

Can you see on the DRV website how many pension points I've generated thus far? I logged into the website yesterday but some of the features seem to be out of commission at the moment.

 

I'm also interested to see how Brexit would affect this. Has the UK government released any preliminary info about this?

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I don't have access to the DRV online (yet) as I will need to prove my identity in person to gain access as I don't have an ID card to register...  But you can ask at any time for a current position statement by snail-mail.  I think it's called a Kontoklaerung.

 

In terms of Brexit, the last time I looked I tracked down this briefing paper for MPs https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7894.  The relevant part is:

 

"The Withdrawal Agreement (WA) published in November 2018 would provide for EU Regulations on social security co-ordination to continue to apply after the end of the transition (or ‘implementation’ period) for individuals within its scope (articles 30 to 36). The UK Government said this would ensure that people moving between the UK and the EU before the end of the transition period “were not disadvantaged in their access to pensions, benefits, and other forms of social security, including healthcare cover” (Explainer to the WA, paras 37 to 42).

 

These provisions are unchanged in the new Withdrawal Agreement published on 19 October 2019."

 

The document goes on to suggest that things might be OK even if there is no deal (remember this was the pre-January 2020 "deal", not whatever happens at the end of Transition):

 

"The European Commission has put in place a Contingency Regulation - (EU) 2019/500) - that “ensures that the periods you have worked as an EU citizen in the UK or as a UK citizen in the EU before Brexit, will be recognized, also after Brexit.” In addition, it has “encouraged Member States to continue providing certain social security rights to those UK and EU citizens who have exercised their free movement rights prior to Brexit.” In particular, it has “discussed with Member States that they will continue to allow citizens to export their pension benefits to the UK.”(Commissioner Thyssen, speech, 9 April 2019)."

 

So, given that the WA was signed and came into force in January all should be fine.  However, I heard somewhere that if a deal is not negotiated by the end of the Transition Period (31 December 2020), then provisions in the WA also fall.  Feels a little counter-intuitive, so may or may not be correct.  Maybe I'll go and do some more research and see if I can get definitive current position...

 

 

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11 hours ago, GaryC said:

Those years of study do not apply only to years studied in Germany.  My wife and I had our years of UK study added too.  Whether that applies only in relation to EU countries or others too is not known but again, DRV could help.

 

While the actuarial reduction rules in Germany are quite generous (3.6% per year compared to about 5% in most cases elsewhere), the voluntary contribution rules are less so.  I cannot remember the detail but while in the UK you need to liver for about 3.2 years to recoup your investment in voluntary National Insurance contributions, in Germany it is more like 15 or 17 (I think - I looked into it at one point and decided against because of those sorts of timescales) BUT, as you need only to add 1 year (at most) to make your 4 existing years yield a pension it is certainly worth looking at.  When to make that sort of investment would depend very much on your current age and your future plans as noted above.  

 

I think time studying in the UK does count, but you would need to get a certificate of attendance plus your degree,

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31 minutes ago, RenegadeFurther said:

 

I think time studying in the UK does count, but you would need to get a certificate of attendance plus your degree,

Indeed, and as I said, my wife and I have had those years added.  We needed to provide proof of attendance and certificates for all post-17 periods. 

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1 hour ago, GaryC said:

I don't have access to the DRV online (yet) as I will need to prove my identity in person to gain access as I don't have an ID card to register...  But you can ask at any time for a current position statement by snail-mail.  I think it's called a Kontoklaerung.

 

In terms of Brexit, the last time I looked I tracked down this briefing paper for MPs https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7894.  The relevant part is:

 

"The Withdrawal Agreement (WA) published in November 2018 would provide for EU Regulations on social security co-ordination to continue to apply after the end of the transition (or ‘implementation’ period) for individuals within its scope (articles 30 to 36). The UK Government said this would ensure that people moving between the UK and the EU before the end of the transition period “were not disadvantaged in their access to pensions, benefits, and other forms of social security, including healthcare cover” (Explainer to the WA, paras 37 to 42).

 

These provisions are unchanged in the new Withdrawal Agreement published on 19 October 2019."

 

The document goes on to suggest that things might be OK even if there is no deal (remember this was the pre-January 2020 "deal", not whatever happens at the end of Transition):

 

"The European Commission has put in place a Contingency Regulation - (EU) 2019/500) - that “ensures that the periods you have worked as an EU citizen in the UK or as a UK citizen in the EU before Brexit, will be recognized, also after Brexit.” In addition, it has “encouraged Member States to continue providing certain social security rights to those UK and EU citizens who have exercised their free movement rights prior to Brexit.” In particular, it has “discussed with Member States that they will continue to allow citizens to export their pension benefits to the UK.”(Commissioner Thyssen, speech, 9 April 2019)."

 

So, given that the WA was signed and came into force in January all should be fine.  However, I heard somewhere that if a deal is not negotiated by the end of the Transition Period (31 December 2020), then provisions in the WA also fall.  Feels a little counter-intuitive, so may or may not be correct.  Maybe I'll go and do some more research and see if I can get definitive current position...

 

 

OK, so having broken my brain reading all sorts of UK Parliament briefing papers and looking at the DRV website, I think I understand how this will work.  But feel free to point out my lack of understanding if I have got it wrong...

 

The DRV website is actually what raised my concerns about what might happen at the end of transition (see https://www.deutsche-rentenversicherung.de/DRV/DE/Rente/Ausland/Ansprechpartner-und-Verbindungsstellen/Grossbritannien-Nordirland/aktuelles-brexit_en.html) - copied below in italics:

 

"On 31 January 2020 the United Kingdom of Great Britain and Northern Ireland (United Kingdom) left the European Union (EU). Nevertheless, for the time being European law continues to apply in relation to the United Kingdom. This follows from the withdrawal agreement negotiated between the EU and the United Kingdom, which entered into force on 1 February 2020.

 

The withdrawal agreement provides for a transition period ending on 31 December 2020, which may be extended once by one year or by two years if the UK and the EU agree on this by 30 June 2020. During the transition period European law, and thus the regulations coordinating social security under European law, continues to apply in relation to the United Kingdom. Therefore, there will be no changes for insured persons who become eligible for a pension for the first time or who again file their pension claim until 31 December 2020 or for persons already drawing a pension.

 

For the period after the end of the transition period the withdrawal agreement also provides for provisional protection in the area of social security and protection of legitimate expectations for persons who already had a prior transnational connection with the United Kingdom and the EU Member States.

 

The EU and the United Kingdom have expressed their willingness to review their mutual relations in the course of 2020 for the time of the transition period. The further development of future relations in the field of social security remains to be seen.

 

Therefore, it is important to note that rights in relation to the German pension insurance scheme are for the time being protected by the Brexit deal through the withdrawal agreement.

 

It has yet to be determined on the basis of further developments which regulations will be applicable after the end of the transition period to persons who are insured on the basis of their place of residence, the employment or occupation they pursue, or their employer‘s registered head offices in Germany, the United Kingdom, or another country where European law is applied."

 

This seems to say everything is still up for grabs if you apply for your pension after 31 December 2020 - worrying!

 

However, this riveting read https://researchbriefings.files.parliament.uk/documents/CBP-8706/CBP-8706.pdf seems to add clarity at 4.2, and in particular,

 

"The Withdrawal Agreement allows social security co-ordination to continue to apply to people after the end of the transition period, for those coming within the scope of the Agreement. The UK Government’s Explainer for the previous Withdrawal Agreement said that this would ensure that people moving between the UK and the EU before the end of the transition period “are not disadvantaged in their access to pensions, benefits, and other forms of social security, including healthcare cover.” The Agreement also provides protections in other circumstances so that, for example, where a UK national has previously worked and paid social security contributions in a Member State, rights flowing from those contributions, such as benefits, pensions, and reciprocal healthcare rights, are protected." (my bolding)

 

So, if my understanding is correct (hmm, not overly confident on that one), then anyone who is covered by the WA, i.e. UK nationals in the EU or EU citizens in the UK at 31 December 2020, and anyone who previously accrued rights to an EU social security pension (here a German pension) in the past is protected.  What is up for grabs (and presumably what DRV is referring to) would then be what happens for people who move to the UK from the EU or to an EU member state from the UK after 31 December 2020.

 

But I would still like to see it in black and white from either the DRV or the UK's DWP.  Maybe I'll call the International Pensions Centre and see how they see things working...

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Too late to edit my previous post but I found this on the EU Commission site https://ec.europa.eu/commission/sites/beta-political/files/2018-11-26_qa_citizens_rights_en_0.pdf. The two FAQs copied below (from page 40) seem to provide comfort:

 

I have retired and now receive a pension from both the UK and Slovenia, where I used to work before. Will something happen to my pension after the end of the transition period?
Nothing will happen to your pension. You will continue receiving a pension both from the UK and Slovenia as you were before.

 

In the past, I worked for 12 years in the UK. I have moved and now work in Austria. Once I retire (around 2035), what will happen with the periods of work – and insurance – in the UK and Austria?
Your periods of work will still count and once you retire, you will receive your UK pension (or, rather, its part corresponding to the 12 years of employment) and your Austrian pension (the part corresponding to the number of years you have worked in Austria) under the same conditions that apply currently in the EU.

 

B)

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