German Pension Financing Develops Positively, Study Finds

The financing of Germany's statutory pension system is in a good state, especially when compared to three decades ago, according to a calculation by the Hans Böckler Foundation. The foundation, which is close to trade unions, found that pension expenditures, measured against economic output, are lower now than in the 1990s, even with a significantly larger number of pensioners and a reduced contribution rate for insured individuals.

In 1997, statutory pension insurance expenditures stood at 10% of the gross domestic product (GDP). This figure rose to 10.4% by 2003 but subsequently decreased to 9.3% in 2024. Consequently, financing the pension system in 2024 cost 0.7 percentage points less of GDP than in 1997. One percent of Germany's GDP in 2024 amounted to 43 billion euros.

Simultaneously, contribution rates have declined over the years. They were 20.3% of gross wages in 1997, dropping to 19.9% by the late 2000s and further to 18.6% by 2024. The proportion of federal subsidies, the part of the pension financed directly by the federal budget, is also lower than 20 years ago. In 2024, the federal budget financed 29% of the statutory pension insurance, down from 34% in 2003. However, the federal share was lower in the 1990s, ranging between 20% and 25%.