East offers women higher pension averages at €357 compared to the West
In Germany, a significant disparity in average monthly pensions between women in western and eastern states has been identified, with women in the west receiving less than their counterparts in the east. This difference can be attributed to several factors, as revealed by a joint study by the Prognos Institute and the German Insurance Association (GDV).
Historical and Economic Differences
The division between East and West Germany has historically influenced economic conditions, employment opportunities, and earnings. After reunification, eastern Germany experienced slower economic growth and fewer job opportunities compared to western Germany, which has led to lower average earnings and, consequently, lower pensions.
Career Breaks and Part-Time Work
Women in both regions often take career breaks related to childcare and more frequently work part-time. However, these factors may be more pronounced in eastern Germany due to differing social and economic conditions. Although the German pension system provides additional credits for raising children, these do not fully compensate for the impact of part-time or interrupted careers.
Pension Calculation System
The German pension system is based on a point system related to lifetime earnings, meaning that higher earnings during working years result in higher pensions. Since women generally earn less than men and have more career interruptions, their pensions tend to be lower. Regional differences in earnings also contribute to disparities in pension amounts.
Regional Living Costs
While living costs are generally lower in eastern Germany, this does not directly affect the absolute pension amounts but can influence the purchasing power of those pensions. However, the core issue remains the difference in earnings and career longevity between the two regions.
The Impact on Pension Amounts
On average, a woman in the east receives 1,218 euros in monthly pension, 357 euros more than in the west. It is important to note that Moritz Schumann, deputy CEO of the GDV, has made a statement about the reasons for the pension difference, highlighting the impact of career breaks, part-time work, and the pension calculation system.
Regional Variations
In western German states, women receive an average of less than 1,000 euros in monthly pension, with the Rhineland-Palatinate Eifel district of Bitburg-Prüm having the nationwide lowest average monthly pension for women at 668 euros. In contrast, women in Potsdam have the highest average monthly pension of 1,314 euros.
In the east, the employment rate of women has historically been higher, and the average monthly pension for men in 2023 is not less than 1,416 euros. However, some places in Germany have low average pensions for men, less than the average women's pensions in certain eastern states (Brandenburg, Saxony, or Mecklenburg-Western Pomerania). The district of Waldshut in the Black Forest has the nationwide lowest average monthly pension for men, at 1,201 euros.
On the other hand, the west-east difference in men's pensions is now minimal, with the nationally highest average monthly pension for men found in the Ruhr area, with Bottrop district leading at 1,686 euros per month. The Prognos Institute and the German Insurance Association (GDV) did not provide information about the calculation of men's pension amounts in this paragraph.
In conclusion, the gap in average monthly pensions between women in western and eastern Germany is influenced by economic disparities, career patterns, and the pension calculation system. Addressing these issues is crucial to ensuring fairness and equality in retirement income for all German citizens.
- In addition to the economic factors, the disparity in science and health-and-wellness research funding between western and eastern Germany may also contribute to the pension gap, as it could potentially affect the chances of career advancement and lifetime earnings for women, especially in the field of women's health.
- To further address the issue of pension fairness, businesses could focus on providing equal employment opportunities and supportive work environments, such as offering flexible work arrangements and financial support for childcare, to help women sustain long and prosperous careers in both east and west Germany.
- Additionally, finance experts suggest that closing the pension gap requires comprehensive policy changes and long-term investments in education, infrastructure, and industry, with a particular emphasis on sectors that offer high-paying jobs and attractive career prospects for women in health-and-wellness, science, and business.
