Retirement Planning Template for Germany

Germany's retirement system rests on three pillars, and how they interact shapes any long-term plan. The first is the gesetzliche Rentenversicherung (statutory pension), funded by mandatory contributions of 18.6% of gross salary split equally between employee and employer. Each year of contributions earns Entgeltpunkte (pension points), each worth EUR 42.52 a month from 1 July 2026, and the annual Renteninformation letter estimates projected monthly benefits. For someone earning the average salary across 45 years, the statutory pension currently replaces roughly 48% of pre-retirement income before tax, a level policy has repeatedly acted to hold but which demographic pressure keeps pushing down.

The second pillar, betriebliche Altersvorsorge (bAV), covers employer-sponsored schemes. Since 2002 employees have had a legal right to Entgeltumwandlung, converting part of gross salary into pension contributions and reducing income tax and social security payments in the process. For 2026 the first EUR 338 a month is free of both, with a further EUR 338 free of income tax alone. Many employers add contributions of their own. The specifics vary widely, with some companies offering Direktversicherung (direct insurance) and others using Pensionskassen or Unterstützungskassen, so what is actually on offer differs from employer to employer.

The third pillar is private provision, where the Riester-Rente and Rürup-Rente (Basisrente) are the main government-supported options. Riester contracts come with state subsidies, a Grundzulage of EUR 175 a year plus a Kinderzulage for parents, alongside tax relief, though fees and product complexity have drawn steady criticism. That criticism carried: Riester closes to new contracts on 1 January 2027, replaced by the Altersvorsorgedepot, while existing contracts continue. Rürup is aimed primarily at the self-employed and allows deductible contributions up to EUR 30,826 for 2026. Beyond these two, ETF savings plans (ETF-Sparplan) through low-cost brokers have become a widely used supplement.

One detail worth noting: Germany is gradually phasing in full taxation of pension income. For those starting to draw a pension in 2026, 84% of the statutory pension is taxable, a share that climbs by half a point each year to 100% for retirements from 2058 onward. The effective value of pension income therefore depends partly on when retirement begins. Working the tax treatment of all three pillars into the projection gives a more realistic picture of what actually arrives each month.