Pensions in Germany

The German pension system, known as the "public retirement insurance," was established over 100 years ago by Chancellor Bismarck, making it the world's first formal pension system. It has been successful in providing a high and reliable level of retirement income and has served as a model for numerous social security systems globally. Originally designed as a scaled premium system, it became a pay-as-you-go system in 1957, mandating participation for all dependent employees and certain self-employed groups. The system is characterized by a fragmentation in terms of institutions, coverage, contributions, and benefit levels.

Pensions in Germany are based on a “three pillar system”.

  • First pillar: mandatory state pension insurance (gesetzliche Rentenversicherung). This part of the basic social security system. All employees and employers pay a percentage of salaries into this system.
  • Second pillar: voluntary occupational pension insurance
  • Third pillar: private insurance
This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.