Published on July 21, 2023
Collecting a pension in Germany for foreigners
Are you a foreign resident considering retirement in Germany? Your eligibility to collect a pension in Germany depends on several factors, including your specific immigration circumstances and the type of pension you’re interested in. It must be said that the German pension system is rather complex, so it’s important to inform yourself about the different types of pensions if you hope to settle down in Germany.
Why is this so important? If you want to ensure a comfortable lifestyle in old age, you’ll need to make sure that your Altersvorsorge (pension) is sufficient to cover all of your necessary expenses. So, here is a quick introduction to the types of pension potentially available to you as a non-national German. With a bit of work and research, you can secure a rosy financial future for yourself!
Germany was the first country in the world to introduce an age-related social security system, which came into being under Otto von Bismarck in 1889. This isn’t just a bit of historical trivia — it also means that there is a long, well-developed history of pension provision in Germany.
Though retirement used to begin at age 65, but will gradually increase to 67 by 2029. There are a number of ways to potentially retire earlier. For example, you may be able to retire at 63 if you have contributed to your pension for 45 years. Of course, that means you would have started working at 18 years old!
Those who have contributed to their pension for at least 35 years can also take early retirement, but they will have a somewhat reduced benefit. In many professions, a person can continue to work after reaching retirement age if they wish. This option will accrue increased benefits when the decision to retire is finally made.
A statutory pension is based on the contributions to your pension you have made throughout your working life. To be eligible for the statutory pension, you generally need to have contributed to the German social security system for a considerable length of time. The minimum contribution period is five years, which can be accumulated through employment, self-employment, and even through intervals of child and familial care. Pension contributions can be made in Germany or in some cases, from other EU countries.
Eligibility requirements for non-statutory pensions vary, depending not solely on residency in Germany, but also on your employment status and citizenship.
One important type of non-statutory pension is a company pension, which is a collective pension scheme to which employees contribute through their employers. Company pensions supplement the state pension plan so that retirees can enjoy more money in retirement than what the statutory pension alone provides. They are becoming increasingly common in Germany, with about 60% of the eligible population contributing to one.
You may also be interested in a private pension (private Altersvorsorge). You can set up a private pension plan through banks and insurance companies. These are encouraged by the German government through various tax incentives and bonuses. They include the Riester Pension (Riester-Rente) and the Rürup Pension (Rürup-Rente), designed for self-employed individuals and high earners.
A variety of payment methods, payout schemes and tax liabilities distinguish these plans from each other. Reach out to an experienced accountant or tax adviser to help you determine which plan (if any) suits your particular situation best.
As you can see, pension funds are a special and fairly tricky area of research.
For accurate and current information regarding your unique situation, contact the Deutsche Rentenversicherung (German pension insurance agency) directly. They can also advise you on the requirements for collecting a pension in Germany or when you return home, if you don’t plan on staying in Germany forever. You can find email addresses for each Bundesland on the Deutsche Rentenversicherung website.
We recommend getting in touch with a financial consultant before making any big moves, particularly if you are considering a private pension.
Expats who work in Germany and subsequently leave can ask for a pension refund (Beitragserstattung) to get their contributions to the German pension insurance fund back. These refunds are processed through the German pension office (Deutsche Rentenversicherung).
To begin the application process for this refund, you must meet the following requirements:
How you go about collecting your refund depends on your nationality and whether that country is in the EU or has a bilateral agreement with Germany. To be sure you reclaim your full entitlements, you may wish to consult a financial advisor.
If you have worked in Germany and don’t settle there, you can still collect your German pension from the relevant authority in the EU country you have retired in. If you have retired to a country outside of the EU, you will likely need to apply to the relevant authority in the last EU country you were employed in.
The process of claiming your German pension will be easier if you settle in the EU than it will be if you settle in a country outside of the EU. Once you have reached the specified retirement age, you can apply for your German pension at the pension authority of the EU country you have settled in or were most recently employed in.
If you have never been employed in the country you have settled in and it is outside of the EU, your application will be made to the last country you worked in. The authority in that country (or the EU country you have settled in) will then gather all your pension records from Germany and any other EU country you have worked in. You will, of course, have to provide your social security numbers, proof of your identity and other relevant details, including your bank details.
Make sure to apply in good time, and be aware that retirement ages vary from country to country. You will only be entitled to collect the pension due to you from Germany (or any other country you worked in) when you’ve reached the specified retirement age.
For those who wish to collect a German pension outside the EU, things may be more complicated. Fortunately, Germany holds many mutual social security agreements with countries around the world that will make things easier for you.
If you make an application to the German government to collect your pension, you may be able to have your pension transferred through a German bank. While the German state should cover transfer fees, you may be subject to bank charges and conversion fees.
While planning for your old age can be daunting and sometimes confusing, sorting out the details of your pension now can contribute to long-term peace of mind. It is definitely worthwhile to invest time in researching your options and securing your income. Germany’s pension system is among the best in the world, so with some careful consideration and good advice, you should be in good shape as you head into your golden years.
