Facing Retirement without a Pension? Here's What You Need to Know
Unemployed individual's annual pension: zero, due to lack of contributions. - skillfulness-or-pension-neglect-leaves-you-vulnerable-to-financial-hardship
Let's break it down: if you've been a couch potato throughout your life and never held a job, don't worry - you won't be left high and dry when it comes to retirement. Germany's social safety net has got you covered.
There's an exception for parents who've raised more than one kid. They might be eligible for a pension claim because the pension insurance recognizes child-rearing work. Read on for the deets on this.
However, the state offers a helping hand to folks who can't take care of themselves. They're entitled to either Citizen's Allowance (formerly "unemployment benefit II", briefly "ALG II" or colloquially known as "Hartz IV") for those who can work but haven't yet hit retirement age. All others can apply for the so-called Basic Security.
When Pension Isn't Enough - Enter Basic Security
Think of Basic Security as the pension for those who've neither saved enough for their golden years nor made alternative retirement plans. The German Pension Insurance advises that if your monthly expenses are more than 1062 euros, you should have your eligibility for Basic Security checked.
The criteria for Basic Security and Citizen's Allowance are pretty similar, and you'll have to apply for both at your local social welfare office. You can even apply for Basic Security directly with the pension insurance, who'll forward your application to the social welfare office. Note that Basic Security is only payable for twelve months, so you'll need to reapply every year.
Maintenance Obligation - Parents and Kids in the Picture
The government's social benefits come with strings attached. They'll ask you to exhaust your assets first. Plus, parents or kids earning over 100,000 euros gross may be asked to contribute to your maintenance.
Your assets, income sources such as maintenance payments, rental income, interest, life insurance, or widow's pensions will be taken into account for Basic Security calculations. Since we're assuming you haven't worked, here's the gist: These sources will offset your claim.
The German Pension Insurance has published a brochure on the nitty-gritty of Basic Security. Here's a download link for the PDF.
Child-Rearing and a Pension - Yep, it's a Thing
As mentioned, parents can claim a pension even if they haven't worked: the so-called child-rearing periods. You get three pension years for each kid, usually going to the mother. If your child was born before 1992, it's only two and a half years of pension time. Those who have five pension years have already earned a pension claim; the German Pension Insurance (DRV) calls it a "waiting period". Just remember that you need to apply - the pension insurance prefers the term "account clarification". This doesn't happen automatically.
The three years per child can only be claimed by one parent at a time. However, parents can divide the "waiting period" among themselves. It's all about who primarily raises the child. The pension years are only available as long as neither parent has alternative childcare claims (like civil servants). The child-rearing years are valued at a low contribution point. This means that the mother or father has the same pension claim as if they had earned almost the average wage. But even four child-rearing years (12 years) may not be enough to secure a pension claim beyond Basic Security. The pension insurance pays a maximum of 451 euros (as of April 2024) for a parent who hasn't worked, for four children. For more info, visit the DRV website.
- Pension
- Basic Security
- Retirement Provision
- Pension Entitlement
5: Source for more information on Basic Income Support in Germany.
- Should your expenses in retirement exceed 1062 euros per month and you haven't saved enough for your pension or made alternative retirement plans, you might want to consider applying for the German Pension Insurance's Basic Security.
- In order to qualify for either the Basic Security or the Citizen's Allowance, you may be required to have your assets and income sources such as maintenance payments, rental income, interest, life insurance, or widow's pensions examined by the social welfare office.
