The German pension

The German retirement system rests on three pillars: a statutory state pension everyone in regular employment pays into, optional private products subsidised by the state, and any occupational scheme an employer chooses to offer on top. For most newcomers the first pillar is automatic and a little opaque; the others are choices to make once daily life has settled.

The three pillars

Pillar one is the pay-as-you-go statutory pension: today's workers fund today's retirees. Pillar two covers employer-organised plans (betriebliche Altersvorsorge, bAV). Pillar three is private — subsidised products like Riester and Rürup, plus everything you save and invest yourself.

Statutory pension (Deutsche Rentenversicherung)

Almost every employee pays in. The contribution rate is around 18.6 % of gross salary up to an annual ceiling, split roughly half between employer and employee. The deduction is automatic on every payslip.

• Earning credits. Each year of work earns "pension points" benchmarked to the average German salary. Retire on time and at average salary across your career, you receive roughly the average German pension; earn more or longer and the number rises.
• Annual update. Once you have five years of contributions you receive a Renteninformation in the post each year — current entitlement, projected entitlement at standard retirement age, and notes on contribution gaps.
• Self-employed people are usually not required to pay in, with exceptions (certain artists, teachers, journalists, midwives and others). Voluntary contributions are open to most of the rest.
• Standard retirement age is rising gradually to 67. Early retirement is possible with reduced payments; later retirement with bonuses.

Voluntary contributions

Once you have five years of contributions, you can keep contributing voluntarily even after you stop working in Germany or move abroad. Common reasons: cushion a future pension you would not otherwise qualify for, or fill gaps in a career that crossed borders. Apply through the Deutsche Rentenversicherung; you choose the monthly amount within a published band.

Riester and Rürup

Two state-subsidised private pension wrappers, both with a strict mid-life structure: you save during work, you draw a lifetime annuity from retirement. Each suits a specific situation.

Riester-Rente

For employees and certain civil servants. The state tops up your contributions and a child bonus per dependant. Tax-deductible during accumulation, taxed on payout. Worth considering for families on average incomes; the bonuses outweigh the fees.

Rürup-Rente / Basisrente

For freelancers and the self-employed who are not in the statutory system. Contributions are tax-deductible in the year you make them, payouts are taxed later. Inflexible — the money can only become a lifetime annuity — but useful when your top tax bracket is high.

Both products are sold by insurers and banks with widely varying fees. Compare seriously before signing; many older Riester contracts have made underwhelming returns once costs are paid.

Occupational pension (bAV)

Many Düsseldorf employers offer betriebliche Altersvorsorge: you defer part of your gross salary into a pension product, with tax and social-contribution savings now and a payout later. Employers are required to add a percentage to your contributions in most schemes.

The accounts are portable in theory, less so in practice — check at job changes how the existing pot can be carried forward.

ETF and private saving

Outside the regulated pension wrappers, many residents save independently. A common pattern in Düsseldorf, mirroring the rest of Germany:

• A monthly transfer to a brokerage (DKB, ING, comdirect, Trade Republic, Scalable Capital).
• A global-equity ETF (e.g. an MSCI World or All-World tracker) bought via a free or low-cost Sparplan.
• Optional bond or money-market funds depending on age and risk tolerance.

This route lacks the state subsidies of Riester or Rürup, but it is liquid, transparent and tax-efficient up to the annual Sparerpauschbetrag.

Getting contributions back when you leave

Non-EU citizens who leave the German pension system permanently can apply to refund the employee share of their statutory contributions, provided:

• You have left Germany and are no longer in mandatory contribution employment in the EU/EEA or a country with a bilateral agreement.
• You have waited at least 24 months since your last contribution.
• You have fewer than five years of contributions (otherwise you keep entitlement and receive a pension later).

Apply via the form V0901 from the Deutsche Rentenversicherung. Refunds cover only your half — the employer's half stays with the system. EU citizens cannot reclaim contributions but keep credits that count towards their EU pension.

Previous work abroad

If you worked abroad before moving to Germany, contributions in EU/EEA countries and in countries with a bilateral agreement can be combined for the qualifying years calculation. You do not transfer the money; each country pays its share of your eventual pension based on the years you contributed there. Keep records of every previous job.

Related reading: taxes & freelancing, leaving Germany, other insurance.