Nearly 5 million individuals earn below €2,750 annually
In Germany, the pension prospects for low-wage earners are a pressing concern, with many struggling to secure a comfortable retirement. The statutory pension scheme, supplemented by company pension plans, plays a significant role in determining the retirement income of low-wage earners.
Under the statutory pension scheme, employees contributing more than €538 per month automatically pay a percentage of their income towards their pension. This "pay-as-you-go" system funds the pensions of current retirees, with future workers footing the bill. However, due to lower contributions, low-wage earners often receive smaller pension entitlements. Mini-job workers, earning less than €520 per month, can opt out of compulsory pension insurance, though voluntary participation can lead to some pension entitlement.
Annual pension increases, adjusted for inflation and living cost changes, benefit all pensioners, including low earners. In 2025, pensions were increased by 3.74%, providing a modest boost to pensioners' incomes.
Company pension plans, where employers contribute at least 15% of pension savings, offer additional benefits for low-wage earners. However, these benefits are capped, and upon retirement, pensions from company plans are taxable and subject to social security contributions.
Despite these measures, the absolute pension income for low-wage earners tends to be modest. Many low-wage earners may need to rely on supplementary state benefits after retirement to meet minimum living standards.
Moreover, challenges such as increasing living costs and higher insurance contribution rates put additional financial strain on pensioners. According to recent statistics, more than one in four people with at least 45 years of pension insurance currently receive less than 1,300 euros in pension.
The statutory pension alone accounts for only 53% of the gross incomes of those aged 65 and over in 2023. Dietmar Bartsch, a prominent political figure, has criticised the current government for not setting a minimum wage of 15 euros as the lowest wage limit, arguing that this damages the overall wage level.
In conclusion, while the statutory pension provides a baseline for low-wage earners, careful planning and consideration of supplemental savings or state social assistance are essential for a secure retirement. Germany's employees, particularly those in the lower wage group, require a "serious wage offensive" to address the wage distribution in the country.
A serious wage offensive could help improve the wage prospects for low-wage earners in Germany, potentially increasing their personal-finance contributions towards retirement and their eventual finance-business retirement benefits. The current minimum income from the statutory pension is modest and may necessitate the use of supplementary state benefits for low-wage earners to maintain personal-finance standards during retirement.
