Germany’s pension system is entering uncharted territory. The cost of acquiring a full pension point — the key factor that determines later retirement income — will reach a record high in 2026. Experts warn that without corresponding pay rises, many workers could see a long-term reduction in their pension entitlements, increasing the risk of old-age poverty.
How pension points work — and why 2026 changes everything
In the German statutory pension system, each employee collects pension points based on their annual income compared to the national average. Someone earning exactly that average in a given year receives one full point. Lower earners receive a fraction; higher earners accumulate more — up to yearly limits.
For 2026, the Federal Ministry of Labour and Social Affairs (BMAS) projects that the average annual salary will rise from €50,493 to €51,944. This marks more than a 10% increase compared with 2024 — driven largely by significant wage growth in recent years. However, higher average wages mean that it becomes more expensive to earn the same number of points.
A full pension point in 2026 will equate to contributions of €9,670.58, based on the standard contribution rate of 18.6%. At the same time, the payment value of each point — the amount a retiree receives monthly — increases only modestly, from €40.79 to €42.17 starting July 2026.
Who stands to lose from the pension point increase?
Even if workers contribute the same effort and hours, stagnant wages could result in fewer pension points. This hits especially hard for:
- Low-income earners
- Part-time staff
- Young professionals
- Self-employed contributors paying voluntarily
While high earners at least have the leverage to negotiate salary increases, those in weaker bargaining positions risk shrinking retirement payouts.
Social welfare organisations describe the situation as a “pension point shock” — arguing that structural inequalities may deepen if pay development fails to match index adjustments.
Example: salary vs. pension points in 2026
Annual gross income Pension points earned
- €10,000 0.1925
- €20,000 0.3850
- €30,000 0.5775
- €40,000 0.7701
- €50,000 0.9626
- €60,000 1.1551
- €80,000 1.5401
- €100,000 1.9252
- €101,400 1.9521
Even small deviations from the national average salary can have a long-term cumulative impact. Over decades of work life, this can easily translate into hundreds of euros less per month during retirement — despite similar contributions in effort and working time.
Rising tax and healthcare burdens could further shrink net pensions
Although pensions are projected to increase by about 3.3% in mid-2026, analysts argue that this growth fails to compensate for higher contribution requirements. Additionally, more pensioners may become subject to income taxation if their payments exceed the projected basic tax-free allowance of €12,348 for single retirees.
If health insurance contributions rise in parallel — as expected — the net pension outcome could decline, leaving seniors with tighter budgets despite seeming improvements on paper.
A warning sign for the future of retirement security
Germany’s public pension system is under enormous demographic pressure, and the 2026 adjustment exposes how delicate the balance has become. As the working population shrinks and costs rise, stability increasingly depends on wage growth — something far from guaranteed in all sectors.
Labour associations and social advocacy groups are urging stronger protections for vulnerable earners and a broader debate on pension sustainability. Without action, they argue, more citizens could face financial insecurity long after leaving the workforce.
