🇩🇪 How much will your pension be in Germany?

Pension contributions, pension points, and the guarantee threshold

Apr 17, 2026

Hi Leute, welcome to a new episode of Germany Explained.

This week’s topics are:

🧓 How the pension system works in Germany

🔍 How has SCHUFA changed?

At the end you’ll find our tips 😎

🧓 How the pension system works in Germany

One of the questions we receive most frequently every week concerns the German pension system.

How does it work?

How much will my pension be in Germany?

After how many years am I entitled to it?

Let’s try to answer everything.

The German pension system is based on a very simple principle called the pay-as-you-go system (Umlageverfahren). This means that today’s taxpayers fund today’s retirees. The money deducted from your paycheck each month is used to pay the pensions of those who have already retired.

To be entitled to receive a pension in Germany, you must have worked and paid contributions for at least 5 years. There are 3 main pillars of the German pension system.

1. Contributions

Currently, the total contribution for pension insurance (Rentenversicherung) amounts to 18.6% of your gross salary. This share is split exactly in half between you and your employer.

Therefore, from every paycheck you receive, 9.3% is deducted for your pension. In addition to these figures, there is a tax subsidy from the federal state to ensure the coverage of all pensions.

2. The 48% Level

In Germany, there is a law that guarantees a pension level of 48%. This does not mean that everyone will automatically receive 48% of their last salary!

This is a purely statistical figure. It means that a person who, for all their working years, earned exactly the national average salary, will receive 48% of that same average salary as a pension in the future.

It is a protective mechanism. It ensures that pensions do not fall below this threshold and guarantees that if average wages increase, retirees’ pensions increase accordingly.

3. Pension Points

The German system calculates your final pension by assigning you “points” based on how much you contribute. In 2026, to earn one pension point, you must earn at least €51,944 gross. If you earn half that, you will receive half a pension point.

The maximum number of pension points you can earn in 2026 is 1.95. One pension point is equivalent to €40.79. So, when you retire, you will receive €40.79 for each pension point. You will then have to pay taxes and social security contributions (health insurance and long-term care insurance) on this amount.

Unfortunately, it is now clear that the public pension will not be enough. The German state is encouraging the population to create a private supplementary pension.

But how do you do it?

What are the risks?

And what if you want to leave Germany one day?

For an expat living in Germany, it is not easy to understand the available German tools and, above all, contracts written in “bureaucratic German.” Unfortunately, too many people postpone this decision.

We can help you. If you are interested in building a supplementary pension in Germany for yourself or your children, and you would like to know how it works and what your options are, you can book a free consultation in English with us.

This is a free call for explanatory purposes only. You will be under no obligation to sign a contract. Our collaborator, who has worked in the sector for years and speaks English, will be on the call with us.

Get in touch with us: germanyexplained.de@gmail.com

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🔍 How has SCHUFA changed?

Anyone living in Germany knows that to sign a rental contract, open a bank account, apply for a loan, or buy a car in installments, you might need a fundamental document: an updated SCHUFA report.

Until recently, the calculation method of this agency (which collects data from over 10,000 companies, including banks, phone providers, insurance companies, and utilities) was a mystery. In fact, it was criticized for being opaque and unnecessarily complicated.

In mid-March 2026, a new calculation system was launched that promises to be completely transparent. Instead of using over 250 secret criteria, the new score is based on only 12 precise parameters. Each criterion receives a fixed score, generating a total value on a scale from 100 to 999 points. The higher the number, the better your creditworthiness.

Here is the exact list of the 12 criteria that now determine your score:

Payment irregularities
Age of the oldest bank contract
Age of the oldest credit card
Age of current address
Age of the most recent flexible loan
Bank inquiries and contracts in the last year
Non-banking inquiries in the last year
Recent installment loans
Remaining term of loans
Credit status
Real estate mortgage
Identity verification

Until now, to get an official SCHUFA report, you had to go to a local bank or request it online, waiting about three weeks to receive it. The official paper version cost €29.95. Now, you can access your SCHUFA for free and in digital format directly online.

The new portal also offers a couple of very useful tools:

Total Transparency: You can see exactly which of your data is saved and who has made requests to check your score in the last 12 months.
Error Reporting: Since everything is visible, it is now much easier to spot mistakes that could unfairly lower your score and report them directly for correction.
The “What if...” Simulator: There is a simulation function to test future scenarios. You can see in advance what would happen to your score if, for example, you applied for a new loan, paid off a debt, or cancelled a credit card.

Why is SCHUFA important? A high SCHUFA score allows you to obtain loans more easily, lower interest rates, higher credit limits, and, of course, facilitates signing rental or mobile phone contracts.

Our tips 😎

In this section, we recommend our own services or products, or those from other companies. The links we share are affiliate links. This means that if you purchase through these links, we receive a commission.

This helps us enormously to fund ourselves, keep this project going, and continue producing useful, high-quality content!

👩‍⚖️ Thinking about switching your health insurance?