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How to find out the amount of your future pension?
We constantly hear this question from compatriots who have recently moved. You can find plenty of calculators on the internet, but with unclear coefficients. Let's try to explain it in accessible language.
📍The old-age pension is payable at 67 (from 2031).
You can also retire earlier than this age if your pension contribution record exceeds 35 years. However, the amount of your monthly pension will be reduced.
With a record of service exceeding 45 years, you can retire at 63 while maintaining your pension amount.
📍If you've moved to Germany and started working at 32 or older, there's no point talking about early retirement. As a certain well-known grandpa used to say: arbeiten, arbeiten und noch mal arbeiten 😅
🧮 Now in numbers. The calculation formula looks like this:
MR = EP x ZF x AR x RF
Monthly pension amount = earnings points x access factor x current pension value x pension type factor
✏MSP (Monthly State Pension) = EP (earning points) × ZF (access coefficient) × AR (current pension amount) × RF (pension type coefficient)
✔EP – the contribution points you have earned. These depend on your salary and how it compares to the average salary in Germany. In 2021, the average salary was 41,541 euros. If your salary is 20,770, you will receive 0.5 points; if it is 41,541, you will receive 1 point; if it is 62,311, you will receive 1.5 points, but no more than 2 points per year. Points can also be earned for the birth of a child.
✔ZF – pension reduction factor. Retiring at 67 gives a factor of 1.0. Retiring 1 month earlier than 67 reduces the factor by 0.003; 1 year earlier by 0.036; and 4 years earlier by 0.144.
This also works the other way roundworked 3 years longer – get extra 18%. The pension is increased by 0.5% per month, or 6% per year, if the person continues to work beyond the statutory retirement age.
✔AR – the value of 1 point. In 2021, 1 point is worth 34.19 euros in the Western Lands. In the Eastern Lands, it is worth 33.23.
✔RF – type of pension. We are considering a coefficient of 1.0. There are disability pensions, pensions for the loss of a breadwinner and other individual cases.
Link to the calculator on the DRV website
Let's consider an example:
Ivan Musterman moved to Germany at the age of 35 and has been working as an engineer from day one with a salary of 60,000 euros a year or 5,000 a month.
📍MR = EP × ZF × AR × RF
✔EP = 1.44 points (60’000/41‘541) x 32 (years of service up to age 67) = 46.22 points
✔MR = 46.22 × 1 × 34.19 × 1 = 1,580 euros.
✏Monthly pension amount = 1,580 euros or 32% of your salary.
We hope the logic behind the calculation is clearer now. Of course, there are still many nuances.
A valid question is how to increase one's pension.
❗The solution could be private pension and others financial instruments.
According to the DRV’s forecast, the average pension will amount to 44.3% of gross income by 2030
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