East offers higher women's pensions than the West, with a disparity of €357.
In a recent analysis, it has been revealed that on average, men in the eastern German states receive a pension that is two-thirds higher than their counterparts in the west, while women in the east receive 357 euros more per month than women in the west. This article delves into the factors contributing to this disparity.
The pension gap between the eastern and western states can be attributed to several interrelated factors. Firstly, the contribution ceilings and pension fund structure play a significant role. The statutory pension system in West Germany has a higher monthly ceiling for contributions (€7,300) compared to East Germany (€7,100), resulting in slightly larger pension funds in the west. Additionally, regional variations in employer pension schemes and company pensions contribute to the differences in overall pension levels.
Secondly, work tenure and earnings differences between genders also contribute to the pension gap. Men typically have longer work tenures and higher lifetime earnings due to fewer career breaks and part-time employment, resulting in larger pension entitlements. Although the social insurance system grants pension points for child-rearing, this compensation does not fully close the gender pension gap.
Thirdly, regional economic disparities and demographics also play a role. West Germany has historically had higher wages, more disposable income, and lower unemployment compared to East Germany. These economic conditions affect earnings and, consequently, pension contributions during working life. East Germany faces higher unemployment rates and different demographic trends, which contribute to lower pension entitlements and smaller pensions on average.
Lastly, living costs also impact the adequacy of pensions. While pension amounts might be similar in nominal terms, higher rents and living expenses in certain areas, especially in western cities, can impact the effective purchasing power of retirees' pensions, amplifying perceived differences.
These factors explain why pensions tend to be higher for men than women and higher in West Germany than in East Germany. It is important to note that men, like women, may also experience financial disadvantages in old age due to factors such as career breaks, part-time work, and lower contributions to pension funds and schemes.
The Prognos Institute and the German Insurance Association (GDV) conducted the calculation mentioned, revealing that the district of Bottrop in the Ruhr area has the highest average monthly pension for men nationwide, at 1,686 euros. However, male pensioners in some regions have pensions lower than the average women's pensions in certain eastern states. The national bottom for women's pensions is in the Rhineland-Palatinate Eifel district of Bitburg-Prüm, with an average of 668 euros per month.
The best position nationwide for women's pensions is in Potsdam, with an average of 1,314 euros per month. The employment rates of men in the west and east are relatively similar, with a minimal gap in pensions. It is worth noting that women in the old federal states often worked part-time after their children grew up, leading to less money being paid into pension funds and schemes, resulting in financial disadvantages in old age compared to men.
In conclusion, a combination of contribution ceilings, gender work patterns, average earnings and tenure, regional economic disparities, and living costs explain the wide pension gap between eastern and western Germany. It is crucial to address these factors to ensure a more equitable pension system for all.
[1] Prognos Institute and German Insurance Association (GDV) [2] German Federal Statistical Office [5] European Union Statistics on Income and Living Conditions (EU-SILC)
- The pension gap between men and women, as well as between eastern and western states, can also be observed in the realm of personal-finance, which is closely related to the business of finance.
- In addition to the impact on pensions, the factors contributing to the pension gap can potentially influence the overall business environment and financial stability of individuals, particularly in personal-finance matters.
