- In the video: Pension of 1,000, 1,500 or 2,000 euros: this is what you have to earn to not be poor in old age
The average pension for civil servants in Germany is 2,630 euros, reports the newspaper “Bild”. According to information from FOCUS online, this value only applies to medium and simple services. Senior and senior officials receive a pension of more than 3,000 euros. Pensioners can only dream of values like this. According to the German Pension Insurance, men receive an average pension of 1,637 euros per month. For women it is an average of 1323 euros.
This is the time that employees have to work to receive a civil servant pension
Pension is a benefit that employees receive after paying appropriate contributions. Anyone who pays longer or higher contributions than others will usually receive a higher pension later.
To receive a pension of 2,630 euros, employees today need 69.9 pension points. To obtain a pension point, currently (as of January 2024) you have to earn 3,779 euros gross per month and, therefore, you have to maintain this salary for almost 70 years. Anyone who earns less than 3,779 euros will have to work longer to obtain this pension of 2,630 euros.
Particularly explosive: Whoever today earns 2,500 euros gross per month has to work for a utopian 95 years. FOCUS online shows in a table how long you have to work to earn your gross salary.
For comparison: Civil servants generally receive between 71.75 and 75 percent of their gross monthly income over the past five years as a pension. The Civil Service Association maintains that most civil servants have a technical or university degree. Additionally, public officials, unlike free market employees, are often able to demonstrate a continuous employment history. This also affects the pension.
Many employees can only dream of these values.
Young professionals only earn these amounts in extreme cases, and even during their careers, some jobs don't even come close to this value. According to a survey by the Federal Statistical Office, bakery employees earn an average of 2,383 euros gross. That's 0.7 profit points per year. To receive the public servant pension of 2,630 euros, they must work 100 years.
Hairdressers do not earn even 1,800 euros. This corresponds to 0.5 pay points. After 131 years, a hairdresser accumulates the necessary 70 pay points.
If you want more pension, you have to look for alternatives. “Employees who want to close a gap in pensions must now make private provisions,” the German insurance company explains to FOCUS online.
How you can improve your pension
Mandatory pension insurance offers a solid foundation. However, additional provision from private or company pensions is essential for a life without financial worries in old age. Whether the pension is actually sufficient depends on each individual case. But for some employees it is possible. These measures can help:
1. Private pension insurance
The classic option for private pension provision is actually private pension insurance. It has been sold millions of times in the past. But consumer advocates such as Merten Larisch, pension expert at the Bavarian Consumer Center, advise against entering into a contract.
High costs, opaque investment models and low interest rates often make pension insurance unattractive. “In the payment phase, insurers calculate a life expectancy so high that pensioners sometimes have to live more than 100 years to receive their money,” says the consumer advocate.
Whoever dies first leaves the majority of the sum to the company, not the family. Larisch calls this “money appropriation”: Furthermore, in old age the pension amount does not adapt to inflation. So they lose purchasing power over time.
Klaus Morgenstern, press spokesman for the German Pension Insurance Institute (DIA), also recommends private pension insurance only in exceptional cases: “If you have a great need for security and regularly need a certain amount in old age, you can take out one . However, the security is paid for with a low pension compared to other forms of investment.
2. Company pension plan
Company pension plans (bAV) are more suitable. In principle, every employer must offer this to his employees and also cover part of the payments, except in the case of those who earn more. For several years, a participation of at least 15 percent has been required. The more the employer contributes, the more the title is worth to the employee. Especially if the employer covers all contributions.
But as soon as their own money flows in, employees should take a closer look. “If employees pay for their contract themselves through so-called deferred compensation, their statutory pension entitlement is reduced,” says Morgenstern. This is not always worth it, especially since in these cases the company pension plan is usually just private pension insurance. Their disadvantages don't go away just because the boss adds something extra.
3. ETF or stocks
What is left for private pension provision? Both experts recommend taking control of the investment and investing in stocks and interest investments.
“Investors should create an efficient portfolio,” advises Merten Larisch. “It is best to create a savings plan based on a stock ETF that tracks a global index.” If you like it and know a little, you can spread your money even further and invest in other ETFs, for example covering other regions of the world.
If you don't have the confidence to do it yourself, you can also invest your money through a profitable robo-advisor or in balanced mixed funds that are as profitable as possible. It also makes sense to have a current account as a security component, rather than a fixed deposit or pension ETF.
Stocks are especially suitable for retirement planning, as the long investment horizon allows you to weather capital market fluctuations. With an ETF that invests globally, for example, an average return of seven to nine percent annually can be achieved.
But savers over 50 can also venture into the stock market, says Morgenstern. “You don't need all your capital at once when you retire. Therefore, the terms remain long enough to reduce investment risk.” However, the proportion of stocks in the investment mix should be somewhat lower.
4. Pension Riester
Riester contracts now have such a bad reputation that in recent years the number of new contracts has continually decreased. But subsidized pensions are unfairly criticized, says Klaus Morgenstern. Despite all the problems, there are constellations in which it is possible to obtain high returns. These arise from the allocations that Riester savers receive.
Anyone who wants to get the full state subsidy of 175 euros a year must pay at least four percent of their income subject to pension insurance, minus subsidies. Anyone with children receives 185 euros a year for each child born before 2008 and 300 euros for those born after 2008. This particularly supports low-income people with many children.
Merten Larisch formulates a general rule: “If your own contribution does not exceed a third of the amount contributed, then it is worth it.”
However, Riestern's problem is that almost no contracts are closed anymore. The few that remain are usually bad, says Larisch. But the Riester pension will soon be renovated. Maybe then there will be new and better offers.
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