Pensions in Germany Pensions in Germany Pensions in Germany are based on a “three pillar system”. The scheme is based on the pay-as-you-go (or redistributive) model. Funds paid in by contributors (employees and employers) are not saved (or invested) but are used to pay current pension obligations. Civil servants in Germany do not pay any contributions themselves but their salaries are correspondingly lower than those in the private sector. Recent changes to the system mean that from 2012 to 2023 the retirement age will go up to 66 by 2023. From 2023 the retirement age will be increased by two months each year,
Pensions crisis (say, 10–20) who do. Once the aged population grows, the dependency ratio returns to approximately the same level it was prior to the transition. Thus, by this argument, there is no pensions crisis, just the end of a temporary golden age, and added costs in pensions are recovered by savings in paying for youth. However, if a country's fertility rate falls too far below replacement level, in future there will be unusually few workers supporting the still large retiree population, and the dependency ratio will rise above historical levels, possibly causing an actual crisis. A complicating factor is that support