Approximately a quarter of individuals aged 45 and above.
In a significant move, Federal Minister of Labour Barbara Steffens (SPD) has unveiled the draft of her first pension law, aiming to maintain the pension level at 48% of the average wage until at least 2040. This move is a response to the growing concern over pension security in an aging society.
Currently, the average gross pension in Germany is expected to be around 1,620 to 1,640 euros per month in 2025, with a planned increase of 3.74% from July 2025, adding approximately 66.51 euros monthly for a standard pensioner with average earnings and 45 years of contributions.
However, regional disparities exist, with Western Germany boasting an average pension of about 1,663 euros gross per month, compared to Eastern Germany's lower average of 1,471 euros. Thanks to a gradual pension equalization process initiated in 2018, Eastern pensions have increased to about 90-92% of Western levels by 2025, signalling substantial progress towards regional parity.
The pension system aims to provide stability, yet many pensioners still struggle with relatively low incomes. Approximately 61% of pensioners receive less than €1,200 net per month, and one in three receive under €750. Women, in particular, face lower pensions due to part-time work or career breaks.
From July 2025, pensioners will also face higher contributions to long-term care insurance, now set at 4.8% (including a one-off contribution) deducted from pensions.
German pensions are among the higher ones in Europe in nominal gross terms, but the real value has not always kept pace with rising living costs. The focus on pension stabilisation and gradual equalisation reflects Germany’s effort to maintain social security amidst demographic challenges like aging populations and low birth rates, a concern shared by many European countries.
While specific comparative figures for all European countries are not readily available, Western European countries, including Germany, tend to have higher pension benefits relative to the EU average, but with significant national variations in pension generosity and replacement rates.
The proposed pension law has sparked debate, with the Left Party calling for a change in pension policy, stating that millions of pensioners in Germany have to make do with low pensions while the pension level in other European countries is over 80%. The government, however, emphasises that a low pension from the statutory pension insurance system does not necessarily reflect the standard of living in old age, as other incomes and total household income are relevant.
In summary, Germany offers relatively high gross average pensions with some regional disparities that are narrowing. The system is undergoing reforms to maintain pension levels relative to wages and provide stability despite demographic pressures. However, challenges remain in ensuring pensions keep pace with cost of living increases and achieving equity across genders and regions.
In light of the proposed pension law, there's growing interest in the realm of wealth-management and personal-finance, as many pensioners struggle with relatively low incomes, despite Germany having some of the higher gross average pensions in Europe. The draft law aims to maintain the pension level at 48% of the average wage until at least 2040, which could potentially impact the financial situation of businesses and individuals who depend on retirement benefits. The debate surrounding the law underscores the need for comprehensive wealth-management strategies that consider factors like rising living costs, gender inequities, and regional disparities in pension benefits.
