As an employee, you are generally compulsorily insured in the statutory pension insurance system. Pension insurance includes various benefits:
- Your pension provides you with financial security in old age, when you are no longer receiving an income from work. To receive an old-age pension you must have reached a certain age and have a certain number of years of contributions or credits.
- Pension insurance also supports you if you suffer a reduction in your earning capacity in the course of your working life, i.e. if an illness or disability means that you are unable to work or your capacity for work is reduced. You receive rehabilitation benefits to restore your ability to work, or you receive a reduced earning capacity pension if your health means that for the foreseeable future you will be unable to work or your ability to work will be limited.
- In addition, pension insurance offers comprehensive protection for surviving dependants. It pays pensions to surviving spouses and children in the event of an insured person’s death.
People born in 1946 or earlier begin receiving the standard old-age pension from the age of 65. For people born after 1946, the statutory retirement age is being gradually raised to the age of 67. From 2029, this retirement age will apply to everyone born in 1964 or later. However, the statutory pension insurance system provides for other types of old-age pensions which allow earlier retirement in special personal circumstances, for example if the individual has a severe disability and/or has paid contributions to the statutory pension insurance over many years.
One principle of pension insurance is that the more contributions you pay, the longer you pay contributions and the higher these contributions are, the higher your pension will be later on. In addition to these contribution periods from your earnings from work, you can also be credited for periods spent bringing up children or caring for relatives. Furthermore, “exempt periods” for various situations (such as school-based education) are also credited.
If you have been employed in other EU countries, Iceland, Liechtenstein, Norway or Switzerland, the insurance periods you completed in these Member States are taken into consideration when calculating whether you have completed the qualifying period. However, each of these countries pays you a separate pension as soon as you have reached the retirement age.
Please note: It is important to keep in mind that the statutory pension is lower than the income you receive while working. To maintain your standard of living in retirement, you should supplement the statutory pension insurance with a company pension and/or private provision.