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,
First MacDonald ministry clause, by which applicants had to prove that they were actively seeking work, was introduced, a move that the government saw as a means of preventing abuse but drew criticism from within the Labour movement. For pensioners, increases were made in both old-age pensions and the pensions of ex-servicemen and of their widows and children. Improvements were made in the condition of old-age pensioners by allowing small incomes from savings to be disregarded in calculating the pension due. As a result of this change, 60,000 elderly people, whose meagre savings had previously reduced their pension entitlement, received the full state