How the pension in Germany is calculated: formula, pension points and calculation examples

The main formula for calculating the pension

The state pension in Germany is calculated using an official formula. It is the same for everyone and is used by the pension office to determine your payments.

The official formula is as follows:

The formula ¹ for calculating the pension in Germany:
Pension amount = EP × ZF × aRW × RF

Pension amount =
Pension points ×
Pension entry factor ×
Current value of a point ×
Pension type factor.

At first glance, the formula looks complicated, but in reality it has only four parts:

• Pension points (Entgeltpunkte) — points you collect during your working years, depending on your salary and how many years you have worked;
• Pension entry factor (Zugangsfaktor) — this takes into account whether you retire earlier or later than the official retirement age;
• Current value of a pension point (Rentenwert) — the amount of money in euros set by the state for one point;
• Pension type factor (Rentenartfaktor) — depends on the type of pension (old-age, disability, etc.).

Pension points are the most important part. They show how much you have earned during your working life. The other factors either slightly reduce or increase the final amount.

Below, we will explain each part of the formula in simple terms and show an example calculation.

Pension points (Entgeltpunkte) and their value (Rentenwert)

Pension points are the basis of the whole pension calculation system. The more points you collect during your working life, the higher your pension will be.

The principle is simple: if you earn the average salary in Germany for a year, you get 1 pension point in your account in the state pension insurance system. If your salary is half the average, you get about 0.5 points; if your salary is twice the average, you get about 2 points. The points for each year of work are added together.

You can also earn points for things other than work. In certain cases, periods such as raising children, military or alternative service, caring for relatives, or receiving sickness or unemployment benefits (if certain conditions are met) are also counted.

The value of a pension point (Rentenwert)

The value of a pension point is the amount in euros that the state pays for each point you have collected. It is called Rentenwert and is reviewed every year by the government.

The current value of a pension point was set on 1 July 2025 and is 40.79 € ²

The value of a point can change every year depending on the economy and wage growth in the country. This is why pensions are regularly adjusted and increased.

Coefficients and supplements to the pension

Apart from pension points, there are special coefficients that affect your final pension amount. These can either reduce or increase your pension.

1. Pension entry factor (Zugangsfaktor) — this reduces or increases your pension depending on when you retire. If you retire before reaching the official retirement age, your pension is reduced by about 0.3% for each month you retire early. If you retire later, your pension increases by about 0.5% for each extra month.

2. Pension type factor (Rentenartfaktor) — this can reduce your pension or leave it unchanged, depending on the type of pension you receive. For old-age pensions (when you reach retirement age) or full disability pensions, the factor is 1 and does not reduce your pension. For other types of pensions, it can be less than 1.

Extra supplements are possible in some cases, for example for long insurance periods or as part of the Grundrente.

This means that your final pension depends not only on how many points you have, but also on when you retire and what kind of pension you get.

Example of a pension calculation

Let’s look at a simple example to see how the formula works in practice.

The situation:

A person worked for 40 years, earned an average salary for Germany and collected 40 pension points. They retired at the official age and receive an old-age pension.

The calculation:

Pension amount = 40 points × 1.0 (entry factor) × 40.79 € (current value per point) × 1.0 (type factor).
= 1,631.60 € gross per month.

Deductions for health insurance and long-term care insurance will be taken from this amount.

How to find out your pension points and future pension amount

If you are insured in the state pension insurance system in Germany, are at least 27 years old and have at least 5 years of insurance, you automatically receive an annual letter (Renteninformation) from Deutsche Rentenversicherung.

This letter shows how many pension points you have so far, what your expected pension will be if your income stays the same, and a forecast of your future pension when you reach retirement age.

You can also request a detailed statement — Rentenauskunft — from Deutsche Rentenversicherung. This includes a full calculation with all periods taken into account.

You can also check your data online through your personal account on the Deutsche Rentenversicherung website or go to a local advice centre in person.