How is a German pension calculated? The formula and its three factors

Last checked against the official sources: 29 August 2026

Your pension is not a figure some body decides; it is the product of three factors set out in Section 64. Anyone who knows the three can calculate their own pension on a single sheet of paper — and know exactly which factor they can influence and which is entirely out of their hands.

The first factor: how your working years become points

The rule in Section 63 is startlingly simple: the earnings insured in each calendar year are converted into earnings points, and insuring earnings equal to that year’s average yields exactly one full point. Someone who earned precisely the average for forty years accumulates forty points. Someone who earned half the average accumulates half a point per year.

This is why “what will my pension be after ten years of work” is unanswerable without the salary: ten years at twice the average is twenty points, ten years at half of it is five. Duration alone will not do, and salary alone will not do — it is the product that counts.

One clause is widely missed: Section 63 provides that points are also credited for contribution-free periods, at a level that depends on the earnings insured during the rest of the time. Certain gaps in your record are therefore not necessarily counted as zeros.

The points are then multiplied by the access factor to become “personal” points. That is where the decision to draw early or defer enters the equation — not at the end of it.

The other two factors: one is fixed, the other beyond your reach

The pension-type factor is the simplest. Section 63 provides that it expresses the “security objective” of each pension type relative to an old-age pension. That is why it equals 1.0 for old-age pensions — they are the benchmark the other types are measured against.

Section 67 sets the values: 1.0 for old-age pensions, 1.0 for full reduced-earning-capacity pensions, 0.5 for partial reduced capacity, and 1.0 for child-raising pensions. A partial reduced-capacity pension is therefore half of what the same points would yield as an old-age pension — not an administrative estimate but a number in the text.

The current pension value is the one factor you have no influence over. Section 68 defines it as the amount corresponding to a monthly old-age pension where contributions have been paid for one calendar year on the basis of average earnings — in other words, the price of a single point.

It changes on 1 July each year, by multiplying the previous value by three factors: the change in gross wages and salaries per employee, the change in the contribution rate to the general pension insurance, and the “sustainability factor”. Because it moves annually, any figure you read in an older article is no longer right — take your number of points and multiply by the value in force when you calculate.

A fully worked example

Take someone who has accumulated 35 earnings points, is claiming an old-age pension, and starts it on time, neither early nor deferred:

• Access factor = 1.0 ⇒ personal points = 35 × 1.0 = 35
• Pension-type factor = 1.0 (old age)
• Monthly amount = 35 × 1.0 × the current pension value

If the current value is X euros, the pension is 35 × X. That is the whole calculation.

Now change one factor. Drawing three years early (36 months) lowers the access factor to 1.0 − (36 × 0.003) = 0.892, so the personal points become 35 × 0.892 = 31.22 — a permanent loss of 10.8%.

Deferring two years (24 months) instead raises it to 1.0 + (24 × 0.005) = 1.12, so the points become 35 × 1.12 = 39.2 — a permanent gain of 12%, on top of the new points earned by working those two years.

Calculate your own pension

1. Request your insurance record and read off your pointsThe points are stated in the record, so there is no need to estimate them — and it is more accurate than any online calculator.
2. Multiply your points by the access factor1.0 on time, minus 0.003 for each month early, plus 0.005 for each month deferred. The result is your personal points.
3. Multiply by the pension-type factor1.0 for old age, full reduced capacity and child-raising; 0.5 for partial reduced capacity.
4. Multiply by the current pension value in force todayDo not use a value read in an old article — it changes on 1 July every year.
5. Look at the gaps in your record before writing them offContribution-free periods may be credited with points depending on your earnings in the rest of the time, so do not assume they are zeros.
6. Compare scenarios before fixing your dateChange only the access factor in the calculation and the cost of each month early and the reward for each month deferred appear as numbers.

Frequently asked questions

How is a German pension calculated?

Under Section 64 the monthly amount is the product of three factors: the personal earnings points determined with the access factor, the pension-type factor, and the current pension value at the time the pension begins.

How do I earn one earnings point?

By insuring earnings equal to the average earnings of that calendar year. Half the average yields half a point; twice the average yields two.

What is the pension-type factor?

1.0 for old-age pensions, full reduced-earning-capacity pensions and child-raising pensions, and 0.5 for partial reduced-capacity pensions.

What is the current pension value?

The amount corresponding to a monthly old-age pension where contributions have been paid for one calendar year on average earnings — the price of a single point. It changes on 1 July each year.

Do years without contributions count?

Section 63 provides that points are credited for contribution-free periods, at a level depending on the earnings insured during the rest of the time.

I have 35 points — what is my pension?

For an old-age pension starting on time, the amount is 35 × 1.0 × the current pension value — that is, 35 times the value of a point when your pension begins.

How much do I lose by drawing three years early?

36 months × 0.003 = 0.108, so the access factor becomes 0.892 — a permanent deduction of 10.8% from the pension.