Pension entitlement
While you are participating in the Pension Fund, you will receive an annual pension statement via post showing your current pension entitlement. This is always the pension entitlement earned to date upon reaching the normal retirement age – the annuitisation of all previously paid contributions. The annuity rate for calculating your annual pension entitlement depends on your age and the calendar year in which the contribution was paid. It will gradually decrease, as less interest will accrue on account of the continuously shortening term. For contributions paid from 1 January 2018, the following annuity rates apply:
15.5% until the year in which you turn 30,
13.5% from the calendar year in which you turn 31 until the calendar year in which you turn 35,
12.0% from the calendar year in which you turn 36 until the calendar year in which you turn 40,
10.5% from the calendar year in which you turn 41 until the calendar year in which you turn 45,
9% from the calendar year in which you turn 46 until the calendar year in which you turn 50,
7.5% from the calendar year in which you turn 51 until the calendar year in which you turn 55,
7.0% from the calendar year in which you turn 56 until the calendar year in which you turn 60,
6.0% from the calendar year in which you turn 61 until the calendar year in which you turn 65,
5.5% from the calendar year in which you turn 66 onward.
Sample calculation:
If you make a payment of 1,000.00 euros during the calendar year in which you turn 39, your annual pension is 12.0% of the amount paid, thus making the monthly pension entitlement one-twelfth of this amount. Thus, if you made a payment of 1,000.00 euros at this age, your monthly pension entitlement will have increased by 10.00 euros (1,000.00 euros x 12.0% / 12 months). The pension entitlement increases continuously and linearly according to the payment amount.
The Pension Fund can also decide on further benefit improvements based on actuarial appraisals.
Compulsory and voluntary contributions are generally annuitised equally; however, there are some exceptions when calculating disability pensions. The annual pension statement will also show your current pension entitlement due to an inability to work. A disability pension prior to age 55 comprises a projection of the average payment made previously (at most from the last five calendar years). The amount of the disability pension therefore depends on the average contribution amount. For technical reasons, the special case of the care of children is not taken into account in the pension statement, but it is incorporated in the calculation of the disability pension (see parental leave). The widow’s or widower’s pension generally amounts to 60% and the orphan’s allowance 20% of the disability pension. You can find exceptions to this calculation in the information on widow’s or widower’s pension and the information on orphan’s allowance.
The pension statements from the Pension Fund are structured as follows:
(1) calendar year,
(2) the age turned during the given calendar year,
(3) the number of months of participation in the given calendar year,
(4) compulsory contribution paid during the given calendar year,
(5) voluntary contribution paid during the given calendar year,
(6) annuity rate according to age,
(7) pension entitlement per year, calculated from the payments made (compulsory and voluntary contribution x annuity rate),
(8) previously granted benefit improvements. The factors are recalculated with each benefit improvement. If the factor for a given calendar year is 1.00, this means that that calendar year has not yet profited from a benefit improvement. This factor can never sink below 1.00;
(9) annual pension multiplied by the factor of increase,
(10) the sum of all increased annual pensions divided by 12. This sum reflects the already earned entitlement to a retirement pension upon reaching the retirement age on account of previous payments made,
(11) and current entitlement to disability pension.
(12) Additionally, information on how the pension entitlement will increase on account of contributions made in the future is also recorded in the annual pension statement. This allows you to determine relatively quickly which retirement pension you can expect upon reaching the retirement age if a certain monthly contribution is made consistently. Potential benefit improvements on account of surpluses pursuant to § 30 para. 5 of the Statutes are not taken into consideration in this projection.
If it is assumed in the sample calculation above that, in the future, and until turning 67, a participant consistently makes a monthly contribution of 750.00 euros, the prospective retirement pension will be calculated as follows:
Pension entitlement earned thus far from the previously paid contributions, assuming retirement at age 67 (10): 883.93 euros/month;
Entitlement from future payments until turning 67 (12): 750.00 euros x 2.8650 euros = 2,148.75 euros/month;
The retirement pension to be expected upon turning 67 therefore amounts to 3,032.68 euros/month.