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WORKING IN GERMANY

EXPLAINED: Do your pension contributions abroad count in Germany?

Plenty of foreigners in Germany contributed to their pensions abroad before arriving in Germany. What happens to those contributions? And what happens to German contributions if you retire elsewhere? We took a look.

Published: 6 February 2023 09:31 CET
Updated: 11 February 2023 13:43 CET

Two retirees sit on a park bench in Dresden. Photo: picture alliance/dpa/dpa-Zentralbild | Sebastian Kahnert

Some internationals living in Germany may have a complex patchwork of pension contributions they’ve made over their lives. Perhaps you worked in your home country for ten years after finishing university and then moved to Germany. Maybe you worked for another 20 years in Germany, making pension contributions here – before deciding to move to Spain to retire. So how much of your pension counts, when can you retire, and who pays it out?

There’s no easy answer, but depending on the countries you’ve worked in, you may be able to combine your contributions.

Which countries combine with Germany and how does it work?

To be eligible for a German pension, you need to have made at least five years of contributions. What’s key here for internationals though, is that the contributions you’ve made in other countries may end up counting, depending on your situation.

The most obvious example is if you worked in another EU country as well as in Germany. If someone worked in Ireland for three years and made pension contributions there before moving to Germany, and then worked in Germany for another 40 years – EU law mandates that they be treated as having made 43 years of contributions. This is true even though someone typically has to work for ten years in Ireland to receive an Irish pension, for example. If a person in this example applied to retire after working 40 years in Germany and three in Ireland, the German authorities must treat them as having made 43 years of pension contributions.

Typically speaking, in order for a contribution period in another EU country to count, EU rules say you should have paid into the system there for at least a year. So someone who worked in another EU country for six months before moving to Germany will likely not be able to count those six months into their total.

What about pension contributions made in non-EU countries?

EU social rights protections are the most straightforward, with your contributions made in different EU countries generally combining to your overall total when you reach retirement age. Norway, Iceland, Liechtenstein and Switzerland also fall under these rules.

But Germany also has treaties with certain non-EU countries that sometimes work in a similar way. The thing to do is to check and see if the non-EU country you made contributions in has such a treaty with Germany.

The German-American Convention on Social Security for example, allows the time you’ve made contributions to US social seurity to be added to your German total. So if you’ve worked in the US for three years before moving to Germany, you’ll hit the minimum German contribution time of five years after your first two years of work and pension contributions in Germany.

Germany has similar social security agreements with 21 non-EU countries. These include Canada, Australia, Brazil, India, Israel, Japan and more. You can check the full list here.

Germany and the UK have not, so far, signed a social security agreement covering current pension contributions. Contributions made in the UK before February 1st, 2020 fall under the Brexit deal and are treated much the same way as contributions made in another EU country are.

EU law and tax treaties Germany has with other countries make it possible for some people to collect pension payments from different countries at once. Photo: AFP

When can I retire and who pays out my pension?

To collect your pension when you retire, you file your pension application with the last country you worked in – even if you don’t live there. For example, if you spent 35 years working in Germany and then the last five years of your working life in Spain, you would file your pension application with Spain. If you finished your working life in Germany and then moved to Spain to retire, but never worked there, you would file your pension claim with Germany.

The country you apply to then contacts the other countries where you’ve made contributions and lets you know what each one’s decision is, provided a pension treaty applies. Each country then ends up paying you the pension entitlement you have with them separately.

Crucially, they’ll also pay you according to when you’re eligible in each country. For example, when someone whose made pension contributions in both Spain and Germany turns 65, they can claim the Spanish part of their pension – but not yet the German part. That’s because Spain’s retirement age is 65 but Germany’s is 67. Someone in this situation would collect only the Spanish part of their pension for two years until they turned 67. At that point, they’d start also receiving their German pension on top of their Spanish one.

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COMPARED: Germany’s Chancenkarte vs. Austria's Red-White-Red card for skilled non-EU workers

The skills shortages in Germany and Austria have become recent and urgent priorities for both governments. At least 124,000 jobs need filling in Austria and the government estimates the actual need could be double that number. Germany’s Labour Ministry estimates it currently needs to recruit around 400,000 foreign workers a year – just to keep up.

As two German-speaking countries, Germany and Austria are competing for a lot of the same skilled talent. So aside from the other aspects of living in either country – which one is offering a better visa regime?

Here, it depends a lot on your situation and priorities. As an example, each country’s EU Blue Card scheme works a little bit differently. Germany’s generally requires a higher minimum salary than Austria’s. But Germany’s also makes getting permanent residence later a little bit easier – so potential applicants have to consider some trade-offs.

The new German Chancenkarte, or ‘opportunity card’ – how it’s set to make looking for work in Germany easier

For those who aren’t necessarily eligible for an EU Blue Card in Germany or Austria, other types of work or jobseeker visas exist.

Foreign specialists looking for a job in Germany typically need a job offer related to their professional qualification, and the German employment agency must approve the job offer. Applicants older than 45 must also have an annual salary of at least €46,530 (2023 values) – if they are coming to Germany for the first time. Even this minimum salary is lower than the threshold needed for an EU Blue Card in Germany.

But what if you don’t have a formal job offer?

The current traffic light government of the Social Democrats (SPD), Greens, and liberal Free Democrats (FDP) wants skilled people to also be able to come to Germany to look for work. The Chancenkarte – set to pass the Bundestag in the next few months – is designed to help non-EU nationals do this on a points basis.

German Bundestag

The German Bundestag is set to pass the new “opportunity card” or Chancenkarte – in the next few months, allowing some skilled workers to come to Germany to look for work even without a job offer. Photo: Felix Mittermeier/Pixabay

To be eligible for it, applicants have to broadly fulfill three out of these four conditions – meaning that applicants could still be considered for the Chancenkarte if they don’t have a formal job offer and are still missing one of these:

A university degree or professional qualification
Professional experience of at least three years
German language skills or previous residence in Germany (higher language skills give more points)
Under 35 years-old

The Chancenkarte thus differs from the current jobseeker visa, which lets people come to Germany to look for work if they have:

a qualification recognised in Germany and a practice permit for a regulated profession
proof a German language skills (typically to B1 level)
proof of ability to pay living costs

Designed to be more flexible, in the right circumstances, a future Chancenkarte holder could end up including a young person who has no university degree but both language skills and work experience. The German employer may be able to then hire this person, if they can work out a plan that allows the employee to upgrade their qualifications accordingly for the German job market.

Other future Chancenkarte holders might also include someone who doesn’t yet speak German but who is young with both a university degree and job experience, or a recent graduate with no experience but has appropriate language skills.

The government is looking to give Chancenkarte holders the ability to look for a job in Germany for one year. That’s longer than the current jobseeker visa’s six-month term. Holders are also allowed to engage in part-time or trial employment, allowing the employer to get to know the potential employee before hiring them on full-time.

Austria’s “Red-White-Red” card – the advantages for certain professions

Because Germany’s Chancenkarte is still in the draft law phase – even if expected to be approved soon – we know a lot more about the specifics of Austria’s Red-White-Red card.

Firstly, Germany’s Chancenkarte is designed for flexibility and is intended to allow potential skilled workers to come to the country even if they don’t have a job offer. By contrast, most applicants for an Austrian Red-White-Red card must have a job offer. Austria’s Red-White-Red card is also more specifically targeted, maintaining different points schemes for different types of skilled workers.

Furthermore, Austria’s point system for the Red-White-Red card gives additional advantages to graduates in STEM subjects like math, engineering, natural sciences or technology – if they are applying under the “Very Highly Qualified Workers” scheme of the Red-White-Red card.

At the same time, a Red-White-Red applicant in a “shortage occupation,” may find it slightly easier than other applicants to get enough points to qualify for a Red-White-Red card. Shortage occupations include many types of experts who will have had a high level of academic advanced education – like engineers or physicians. But many shortage occupations in Austria also include skilled workers with vocational training, such as roofers, masseuses, bakers, and carpenters. Some shortage occupations are Austria-wide, while others are region-specific. You can find the full list at the available links.

Most non-EU applicants for Austria’s points-based Red-White-Red card will need to secure a job offer before getting the card, unlike with Germany’s planned Chancenkarte. Photo by Tima Miroshnichenko from Pexels

Certain “Other Key Workers” may also be able to apply for a Red-White-Red card, provided they have enough points, no equally qualified registered jobseeker at the Public Employment Service can be placed, and they are paid a minimum monthly salary of €2,925. Certain seasonal workers can also apply if they’ve worked for at least seven months of the last two years in that occupation and have at least A2 level German. These people also need job offers.

The only potential Red-White-Red applicants who don’t need job offers are self-employed key workers and start-up founders. Both of these applicants though, need to prove a minimum level of capital, amongst other requirements.

Successful applicants for a Red-White-Red card may then work in Austria for up to two years, at which point they may apply to extend their work permission through a Red-White-Red Plus card, which gives the holder unlimited access to the Austrian labour market that isn’t bound to any specific employer.

German – and English – language skills: How the Chancenkarte and Red-White-Red value languages

The other big difference between the German Chancenkarte and the Austrian Red-White-Red revolves around the points awarded for German or English skills.

In general, Austria’s Red-White-Red tends to require a lower level of German language skills in order to achieve points in an applicant’s favour. For example, applicants in shortage occupations will get five points for the most basic level of German – A1. That increases to 10 points for A2 and 15 points for B1 – to a maximum possible 15 points from German language skills.

By contrast, the current draft plans for the German Chancenkarte would require an applicant to have C1 German – the second-highest possible level – to get maximum points under language skills. Even B2 German – an upper intermediate level where speakers can begin to make advanced arguments – only yields a Chancenkarte hopeful partial points.

A German for Dummies language book sits atop a desk next to a pen and a cup of coffee. Photo by Jan Antonin Kolar on Unsplash

Getting points for language skills is generally easier under Austria’s Red-White-Red card system than Germany’s proposed Chancenkarte. Photo by Jan Antonin Kolar on Unsplash

Furthermore, Austria places English language skills on a mostly equal footing with German language skills – with basic A1 English being enough to get some workers partial points under the Austrian Red-White-Red scheme. A skilled worker looking to apply under Red-White-Red who can speak both English and German at a B1 level would already achieve the maximum number of points an applicant can get from languages under the Austrian Red-White-Red system.

By comparison, the German government has not announced plans to give out points under the Chancenkarte system specifically for English language skills, even if some applicants will be able to get enough points to get one even without speaking German at a high level. We should stress though, that the German Chancenkarte legislation is still in the draft phase and could change in some ways before it’s passed.

Flexibility and language trade-offs

The German Chancenkarte may ultimately end up being a more flexible option for skilled workers who want to come to Germany first before they commit to any one particular employer. It may also end up being more favourable for people who don’t come from the shortage professions that Austria is specifically targeting, for example. By contrast, getting a Red-White-Red card in Austria almost always requires a specific job offer.

Yet some applicants who snag a job offer may find it easier to qualify for Austria’s Red-White-Red card if they have a lower level of German language skills – particularly if they can speak English – which Austria’s points system values in a way that Germany isn’t considering.

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