Receiving a pension is contingent upon a pre-tax salary of 4100 euros. - Monthly pension amounts to 4100 euros.
In Germany, the pension system is based on the Entgeltpunkte (pay points) system, which accumulates points over the years based on salary and service length. This system is used to calculate the final pension amount, taking into account factors such as retirement age and the type of pension.
For an average German employee earning €4,100 per month, here's a breakdown of how the theoretical pension calculation contrasts with the practical application:
## Theoretical Calculation
1. **Pay Points (Entgeltpunkte):** The formula for calculating pay points is based on dividing the annual earnings by the contribution assessment ceiling. For 2023, this ceiling was approximately €7,050 per month or €84,600 per year. For someone earning €4,100 per month (€49,200 per year), the calculation would be: \[ \frac{49,200}{84,600} = 0.58 \text{ points per year} \] Over a 45-year career, this would result in 26.1 points.
2. **Pension Calculation:** The pension amount is determined by multiplying the accumulated points by the current pension point value. As of July 2025, the pension point value is €40.79. So, for 26.1 points: \[ 26.1 \times 40.79 ≈ €1,066.19 \text{ per month} \]
## Practical Considerations
- **Pension Increases:** German pensions are adjusted annually to reflect wage developments, meaning the pension amount increases over time. For example, there was a 3.74% increase in July 2025. - **Additional Contributions:** Employees and employers each contribute to the pension scheme, with the employer covering half of the contributions. As of 2025, the total contribution rate is 18.6% of gross income. - **Long-term Care Insurance:** Pensioners also contribute to long-term care insurance, which can affect their take-home pension. - **Supplementary Pensions:** Given that statutory pensions are often insufficient for retirement expenses, many Germans supplement their income with private pensions or other schemes.
## Conclusion
While the theoretical calculation provides a baseline understanding of how pensions are calculated in Germany, practical factors like annual increases, additional contributions, and supplementary pension plans can significantly affect the actual pension amount an individual receives. For an average employee earning €4,100 per month, understanding these factors is crucial for planning retirement income effectively.
It's important to consider individual life courses and employment biographies to obtain a realistic picture of future pension claims. The example retiree in this article is assumed to have worked for 45 years and retired at the end of 2024, starting work in 1979. However, it's worth noting that incomes rarely remain constant throughout a person's working life, making the assumption of a fixed income over 45 years unrealistic in practice.
The most important factor for the pension height is the entitlement points, which result from the comparison of one's own income with the average income and the duration of the working life. In 2024, the average gross monthly earnings for all insured persons were around €3,780 in West Germany and €3,728 in East Germany.
[1] Entgeltpunkte-Rechner:
- The community policy in Germany, regarding the Entgeltpunkte system, could potentially be revised to provide vocational training opportunities for individuals who wish to enhance their personal-finance management skills, ultimately benefiting them in understanding and managing their pension plans more effectively.
- Given the practical considerations like personal-finance management, long-term care insurance, and supplementary pension plans, it's crucial for individuals to engage in vocational training programs to equip themselves with the necessary skills to navigate their retirement finances more competently.
