Every employee in Germany pays into the state pension system, and it takes a noticeable chunk from your paycheck. About 18.6% of your gross salary goes to pension contributions, split evenly between you and your employer. That is 9.3% from your side. On a 60,000 EUR salary, you are paying around 465 EUR per month into the system. The question most expats ask is: will I ever see that money again?
How the German Pension Works
The Deutsche Rentenversicherung (German Pension Insurance) is a pay-as-you-go system. Your contributions today pay current retirees. When you retire, the next generation pays you. It is not an investment account with your name on it.
The standard retirement age is currently 67. To receive a full German pension, you need at least 5 years of contributions (the minimum vesting period). Each year of contributions earns you pension points (Entgeltpunkte), and your final monthly pension is calculated from the total points you have accumulated multiplied by a point value that is adjusted annually.
As of 2026, one pension point is worth about 39.32 EUR per month in western Germany. If you earned the average salary for 10 years, you would get roughly 393 EUR per month at retirement. For 20 years, about 786 EUR. The full pension after 45 years at average salary is around 1,770 EUR per month before taxes and health insurance deductions.
What Happens If You Leave Germany?
This is the critical question for expats. Several scenarios:
- Less than 5 years of contributions - if you leave the EU entirely, you can apply for a refund of your contributions (only your half, not the employer half) after waiting 24 months. EU citizens moving within the EU cannot get a refund but can combine contribution periods
- 5+ years of contributions - you are vested. You will receive a German pension when you reach retirement age, no matter where you live. Payments are sent internationally
- EU/EEA countries or treaty countries - Germany has social security agreements with many countries (USA, Canada, Australia, Japan, South Korea, and others). Contribution periods can sometimes be combined to meet the 5-year minimum
Important: If you have a social security agreement between Germany and your home country, your contribution years may count in both systems. Check with the Deutsche Rentenversicherung and your home country pension authority. This can be extremely valuable.
The Three Pillars of German Retirement
Germany uses a three-pillar retirement system. Relying on just the state pension is a mistake.
Pillar 1: State Pension (Gesetzliche Rente)
The mandatory contributions described above. Provides a basic income in retirement. For most people, it replaces about 48% of their average working income. Not enough to live comfortably on its own.
Pillar 2: Company Pension (Betriebliche Altersvorsorge)
Many German employers offer a company pension, often called bAV. Contributions come from your gross salary before taxes, which saves you money now. Some employers match contributions. Always take the employer match if offered. It is free money.
Pillar 3: Private Pension (Private Altersvorsorge)
This is where you take control. Options include:
- Riester-Rente - government-subsidized retirement savings. You get 175 EUR per year in subsidies, plus 185-300 EUR per child. Only available to people paying into the state pension. Worth it for families, often not for singles
- ETF investing - for many expats, a simple global ETF portfolio through Trade Republic or Scalable Capital is the most flexible and highest-returning option
- Rurup-Rente (Basis-Rente) - tax-deductible retirement savings, mainly useful for freelancers and high earners
Pro Tip: If you are unsure how long you will stay in Germany, focus on Pillar 3 (private investing) over Pillar 2 (company pension). ETF portfolios are fully portable. You take them with you when you leave. Company pensions can have vesting periods and are harder to transfer.
Checking Your Pension Status
Once you have been contributing for at least 5 years, you will receive an annual pension statement (Renteninformation) by mail. You can also create an account at eservice-drv.de to check your status online. The statement shows your projected monthly pension at retirement age based on current contributions.
Should You Opt Out?
Most employees cannot opt out. Pension contributions are mandatory for employed workers. Freelancers and self-employed people generally do not have to contribute (with some exceptions like teachers, midwives, and certain creative professionals). If you are self-employed and exempt, you need to arrange your own retirement savings. Do not skip this.
Our Recommendation
Even if you plan to leave Germany eventually, make the most of the system while you are here. If you stay 5+ years, you have locked in a guaranteed pension income for life. Supplement it with private investing (a global ETF portfolio is the simplest approach), take any employer match on company pensions, and check whether your home country has a social security agreement with Germany. Your future self will thank you.