Pension and retirement in Germany: statutory, company and private

Every payslip in Germany includes pension contributions, but most expats have no idea what they will get back — or what happens if they leave. Here is the system in plain English.

What the German pension system actually is

German retirement income rests on three pillars. The statutory pension (gesetzliche Rentenversicherung) is compulsory for employees: 18.6% of your gross salary, split equally with your employer. The company pension (betriebliche Altersversorgung, bAV) is arranged through your employer, often with tax and social-security advantages. Private pensions are contracts you take out yourself, such as private pension insurance or, for the self-employed, the tax-favoured basic pension (Basisrente).

It needs a full explanation because the three pillars follow different rules on tax, flexibility and — most importantly for expats — what happens when you move abroad.

Why it matters in Germany specifically

The statutory pension is designed to replace only part of your former income, and that share is expected to shrink as the population ages. Germans are therefore encouraged to build up the second and third pillar. Expats face an additional issue: you need at least five years of contributions (60 months) before you are entitled to any statutory pension at all. Periods in other EU countries, and in countries with a social security agreement, can often be counted together.

What it costs

The statutory pension is deducted automatically. For the company pension, you can convert part of your gross salary: up to €8,112 a year (2026) can be paid in tax-free, of which up to €4,056 is also free of social security contributions. If your employer saves social security contributions this way, it must usually add at least 15% on top. Private pension plans can start from around €25–50 a month; what matters more than the amount is the cost structure of the contract — the same question we go through under saving and investing.

What it does not cover

The statutory pension is not a savings account: there is no personal pot you can withdraw early. Company and private pensions are also designed for retirement — early access is limited or expensive, and cancelling a contract in the first years often returns less than you paid in. None of the three pillars replaces protection against disability; that is a separate topic, covered under protecting the people you love.

What happens if you leave Germany

• Statutory pension: If you have at least five years, you can receive your German pension abroad later. If you move to a country outside the EU without a social security agreement, you may instead apply for a refund of your own contributions — but only the employee half, only after waiting 24 months, and you lose all pension rights in exchange. EU citizens and those moving to agreement countries usually keep their entitlements instead.
• Company pension: Contributions from your own salary are yours from day one. Employer-financed parts are usually secured after three years. You can often take the contract with you to a new German employer, continue paying privately or keep it as a paid-up policy.
• Private pension: Usually continues abroad and can be paid out there, though tax rules depend on your new country of residence.

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