A delegation of the PFR delegation led by PFR Board Chairman A.V. Drozdov visited Germany’s Deutsche Rentenversicherung Bund in Berlin in the period from January 30 till February 2, 2012, to sign a protocol on the exchange of delegations between PFR and DRB in 2012. The document will promote exchange of social security practices. The meetings raised the following questions:

  • Pension system funding in Germany;
  • Calculation and indexation of pensions in Germany;
  • Riester pension products. Current data and adjustments.

The state pension system of Germany is based on unfunded pension schemes. Since January 1, 2012, the rate of pension insurance contributions paid 50/50 by the employee and the employer was reduced from 19.9% to 19.6%. State pension system revenue comes both from these contributions, from contributions the Federal Employment Agency pays for unemployment benefit recipients and federal subsidies.

Indexation of pensions is based on the current value of pension. This indicator is calculated every year, primarily depending on the level of wages paid in the country.

The wage replacement rate in the state pension system amounted to 50.8% in 2011. It is planned to be reduced to 43% by 2030. Hence, it was decided in 2002 to introduce an additional voluntary private old age benefit with a cumulative part envisaging state support (the Riester system). As of now, about 15 million contracts have been signed within the Riester system.