The question of financial security in old age is of crucial importance for every employee. In Germany there are two important systems available to ensure a living in retirement: the civil servant pension and the old age pension. When comparing the two systems, clear differences become apparent.
Civil servants are entitled to a lifelong pension
The civil service pension is a retirement pension system that applies to civil servants and professional soldiers in Germany, as the Federal Ministry of the Interior and Homeland (BMI) explains. After reaching a certain number of years of service and a specified minimum age, they are entitled to a lifelong pension. The amount of the pension is calculated based on a percentage of the last salary and the length of service.
A characteristic feature of civil service pensions is their stability and security. The pension payments are independent of economic fluctuations or capital market developments. The pension amount largely depends on length of service and final salary. Civil servants can therefore expect a certain degree of financial predictability in retirement, as FOCUS online reports.
Demographic change demands Pension system out of here
The old-age pension is the central element of statutory pension insurance in Germany and secures the future livelihood of employees without civil servant status. Employees pay contributions into the pension fund during their employment phase. According to the Tagesschau, the amount of the old-age pension depends on various factors, including the number of years of contributions, the average income during the working period and other individual factors.
The old age pension offers important social security because it benefits broad sections of the population. However, pension payments can be influenced by economic factors and the financial health of the pension system. The statutory pension insurance is based on the generation contract, in which the current contributors finance the pensions of the current pensioners. However, the future financing of pensions will be particularly challenged by the ongoing demographic change in society, as Business Insider reports.
Amount of payout
Both the civil service pension and the old age pension are intended to provide financial security in old age. In addition to the differences in the structure of the systems, there is also a clear difference in the amount of payouts. The difference between civil servant pensions and old-age pensions results from the different calculation bases. The civil service pension is based on the last salary and length of service, while the retirement pension depends on individual contributions and years of contributions.
As the Federal Ministry of Labor and Social Affairs (BMAS) announced as part of the 2022 pension insurance report, the average old-age pension in 2021 was 990 euros. In contrast, according to Versicherungsbote, middle-level civil servants who left the service received an average pension of 2,318 euros in 2021, while senior civil servants received 3,339 euros and 4,973 euros in higher service.
Editorial team finanzen.net