The German pension system is based on a point system, in which so -called pension points – also referred to as earnings – form the basis for calculating the individual pension amount. These points reflect the ratio of personal income to the average income of all insured persons and significantly determine the amount of the later retirement pension.
Basics of the pension points
Every employee who pays into statutory pension insurance collects pension points in the course of his working life. The number of points acquired annually depends on the ratio of your own gross income to nationwide average income. This system ensures that the pension height reflects the individual income situation during working life.
Calculation of the pension points
The pension points are calculated according to a specified formula:
1. Determination of the average wage: An average fee of all insured persons is determined annually.
2. Provision of relationship: The personal gross annual income is placed in relation to the average fee.
3. Point assignment: The result of this division corresponds to the number of pension points for the year in question.
For example, an income that corresponds to the average fee leads to a pension point, according to the German pension insurance. An income that is twice as high as the average is two pension points. However, there is an upper limit: The contribution ceiling determines the income to which income contributions to pension insurance are paid and pension points can therefore be purchased.
Value of a pension point
The monetary value of a pension point is determined by the current pension value, which is adapted annually. The annual adaptation of the pension value is based on wage development and is intended to ensure that pensions with general income development keep up, as it continues.
Influence of special times on the pension points
In addition to the regular contribution times, there are certain phases of life that can have a positive effect on the number of pension points:
• Covering periods: Additional pension points are credited to raise children to recognize the educational performance.
• Care of relatives: If you look after a relative in need of care, you can receive pension points under certain conditions.
• Times of unemployment: Pension points can also be purchased while receiving unemployment benefit, provided that there are contributions to pension insurance.
These regulations are intended to ensure that pension claims remain or preserved in phases without earned income, according to the German pension insurance.
D. Maier / Redaktion Finanzen.net