German pensioners massively poorer: they have to collect bottles

by time news

Germany has a three-pillar pension system. In other words, the pension of the average citizen of the Federal Republic of Germany can be formed from three sources. The first is the state pension: compulsory pension insurance. Every month people donate money to the state treasury, depending on how much they earn and who they work for. Upon reaching the retirement age, payments are made from this accumulation fund.

Currently, state pension insurance contributions account for 18.7% of the monthly gross income. Gross is, roughly speaking, the money that the employee costs the employer: the amount stated in the employment contract. There is also net income – this is what the employee receives in his hands (after deducting taxes and some mandatory payments).

Meanwhile, the employer is obliged to pay half of the contribution to the state pension fund. As a result, 9.35% is subtracted from the gross salary for these purposes. The amount is withdrawn automatically when calculating wages.

The second pillar of the German pension system is an occupational pension, which, in turn, is divided into a pension for public sector employees and for employees of large private companies that fall under the control of the respective trade unions. The employer plays a key role here. Companies take care of all the worries about obtaining this type of pension. Many of them pay pensions to former employees in addition to the pensions earned through the compulsory state pension insurance system.

The third source is private insurance. Anyone in Germany can start making contributions to a private pension fund. Such insurance also includes all forms of creating private capital: buying real estate, buying securities and even cryptocurrencies.

All three of these shares are by no means equal in the country’s overall pension statistics. The state pension in Germany is the backbone of future payments for the overwhelming majority of the population of Germany.

Army of old men

People retire in Germany at the age of 67. However, there are options: leaving for a well-deserved rest can be issued earlier than this period, or you can continue to work after reaching the official retirement age. Now, in the corridors of power, the possibility of working until the age of 80 is being discussed, but only for those who wish and with restrictions on wages. At the same time, the country is actively discussing an increase in the retirement age to 69 years.

Note that according to the Federal Statistical Office of Germany, in 2017, 18 million people of retirement age live in the country. This is every fifth inhabitant, and the number will continue to grow. By 2060, it may reach 24 million people. In Western Europe, no other state possesses such an “army” of old people.

In order to receive the minimum payment, a citizen of the Federal Republic of Germany must have a work experience of at least 5 years. After five years of continuous pension contributions, provided that the payer is over 27 years old, the fund sends him an official letter informing him that the employee is now entitled to a German state pension.

If a person continues to pay contributions, every year the fund sends out regular “letters of happiness” with new figures of total savings. Master of Gender Sociology Lili Nebieridze told us about this. She has been living in Bielefeld since 2013. The woman works with migrants and knows a lot about social programs that help to integrate into society.

“All citizens monthly donate funds to the pension fund. At the end of each year, the state sends a paper, which says how much money has accumulated on the employee’s account and what kind of pension a person can apply for in the future. With the growth of seniority, the amount increases, ”our interlocutor explained.

According to Nebieridze, the stereotype that all pensioners in Germany live happily ever after is only partly true. Elderly Germans can be divided into several groups: those with work experience of 5 or more years; those who did not work at all, but reached retirement age; those who receive payments regardless of age, due to illness.

“Germany is formed by 16 federal states, and the pension depends on where exactly the person lives. The average payment is 1.3-1.5 thousand euros per month. This amount, if you live, for example, in Berlin, will not be enough.

The highest state pension is 3 thousand euros. But many elderly Germans complain that they have worked their entire adult life, benefited the country, and as a result receive a small pension, ”our interlocutor notes.

Life in Germany is really expensive. The average family in Germany spends about 1.5-2 thousand euros per month on clothing, utilities, food, travel and leisure. By the way, only monthly expenses for housing and communal services cost an average of about 115 euros.

If it speaks about the housing itself, then many Germans do not have their own apartments, since they are expensive. You have to rent, which is from 310 euros per month in small towns to 930 euros in large cities. In a word, if a pensioner in Germany receives 1.3 thousand euros a month (a fantastic amount for our old people, exceeding 100 thousand rubles at the exchange rate), then in German reality he can hardly make ends meet. Fortunately, for the elderly people in Germany there are various social programs, in accordance with which the state provides them with housing and medicines.

There is also a gender pension gap in Germany. Lili Nebieridze said that women, on average, receive payments less than men – and significantly: by 30%. However, a woman is entitled to additional payments for raising children. Even if she has a short work experience (less than 5 years), but there are kids in the upbringing, the state provides her with assistance. On average, the amount of the supplement is 700-800 euros per month.

It is noteworthy that Germans are allowed to receive a pension while living abroad. Since 2000, the number of German retirees living permanently abroad has grown from 1.1 million to 1.5 million. The motivation of Germans meeting old age abroad is different. Someone moves to children and grandchildren who have settled in other countries. Who chooses warm lands, sea and ocean resorts. Well, someone is corny looking for cheaper places of residence – those where, with your thousand euros a month, you will be a “king”, not a beggar. Be that as it may, almost every seventh pension paid by the German state pension fund goes abroad. Most – 26 thousand pensions – are transferred to Switzerland. Then the USA and Austria follow with 24 thousand pension payments. In total, Germany transfers money to recipients of pension payments in 150 countries of the world.

The pension fund will soon be empty

Vasily Yashkinas, a former employee of MK, who now teaches German at integration courses for foreigners in Hamburg, told us about how pensioners live in Germany.

“There are pensioners in Germany who receive a pension that is good by local standards. At the same time, there are those who, in old age, have to collect bottles in order to somehow feed themselves. And we are not talking about marginals, but about decent citizens.

The problem is the low occupancy of the pension fund. This is a consequence of the long-term retirement trend. The vast majority of local residents are afraid that the pension fund will soon become empty: old people live long and there are many of them, while young people give birth to few, ”our interlocutor notes.

As a result, over the past ten years, the share of working pensioners aged 65-69 has doubled. Partly the reason is the difficult financial situation: economic crises periodically roll over the country, and then the pandemic arrived in time with its lockdowns … Many have to continue working in old age, just in order not to slip into poverty.

By the way, a pensioner in Germany is considered needy if his total income does not exceed 865 euros per month. In this case, the Deutsche Rentenversicherung, the German pension fund association, recommends applying for social security benefits. It is called in Germany the basic material security (Grundsicherung). Covers the allowance for rent and heating costs, clothing, health insurance. The amount of the benefit may differ from case to case, and it also differs from state to state.

– In recent years, a negative trend has been observed in Germany – pensions are getting smaller …

– In 2007, I was at the jubilee of a friend of a pensioner in a restaurant in one of the towns of Germany. Then, during the conversation, local residents said that the state consistently pays decent money. Of course, the amounts depend on the specialty of the person, the place of work: the medical worker received more than, say, the bus driver. At the same time, the state regularly paid extra for processing. But over the years, all additional charges were removed, they stopped paying attention to the length of service.

– And how do people save up for a decent old age?

– Everything is very strict with obligatory pension contributions in the country. They have to be paid monthly. There are also private foundations, but almost no one wants to get involved with them. Residents of Germany understand that if there is a desire to receive a good pension, it is necessary to transfer funds to the state piggy bank. The most interesting thing is that from a young age the Germans begin to think over who they will become and what they will do in order to roughly understand what kind of pension awaits them. In Russia, few people think about this, being, say, a student.

– Let’s go back to the elderly Germans. What are the risks of being left without money on the street?

– It is interesting that even if a German receives a pension of, say, 50 euros, the state pays social assistance (a person cannot receive less than 400 euros per month), and also pays for an apartment and insurance, which includes the cost of medicines. The amount of such payment is small – about 13 euros per day. So many Germans do not live so “curly”.

Workers are forced to agree to “black” salaries, because there is not enough money. Accordingly, their retirement piggy bank is not replenished. As for the state social assistance, which I spoke about, the Germans doubt that it will exist even in its current modest form for many years to come.

– In pre-pandemic times, almost everywhere in foreign resorts, one could meet joyfully vacationing pensioners from Germany …

– The situation is changing before our eyes. Everyone remembers the German retirees who used to travel around the world. Now the elderly in Germany do not live very well. Of course, you need your head without a roof, medical supplies, medicines, no one will be left on the street. But the negative dynamics of the fall in pension income will continue. You can’t run into the resorts here!

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