Pension Insurance : Germany

The statutory pension insurance scheme is one of the pillars of the Federal Republic of Germany’s social security system. It ensures that workers will be able to maintain an adequate standard of living once they have retired. All wage and salary earners are required by law to be in the scheme.Self-employed persons who are not compulsorily insured by virtue of their membership of certain occupational groups can join voluntarily.

Contributions (currently 20.3 percent of gross earnings) are levied up to a certain income level (at present DM8,200 monthly in the old states and DM7,100 in the new states). Employee and employer contribute half each.The scheme pays old-age and invalidity pensions. After the death of an insured person, the dependents receive a proportion of the pension. There is a “waiting period” governing eligibility for pensions; in other words, the individual must have participated in the insurance