Eastern women's retirement benefits outpace those in the West by €357
In a recent study by the Prognos Institute and the German Insurance Association (GDV), it has been revealed that male pensioners in the Ruhr area have the nationwide highest pension, with Bottrop district averaging 1,686 euros per month. However, the study also highlights a significant disparity in pensions between men and women, and between the eastern and western states of Germany.
Men in the old states receive an average pension that is two-thirds higher than women, with the difference now minimal: In the west, it is 1,430 euros, in the east 1,416 euros. The average difference in monthly pension between east and west is 357 euros.
Women in Potsdam receive the highest average monthly pension nationwide, at 1,314 euros, while women in the Eifel district of Bitburg-Prüm receive the lowest average monthly pension at 668 euros. Interestingly, in some regions, men's pensions are less than the average women's pensions in certain states, such as Brandenburg, Saxony, or Mecklenburg-Western Pomerania.
The significant difference in pensions is due to women in the old federal states taking longer career breaks due to family, leading to less pension contributions and entitlements. In contrast, under the former socialist system of East Germany, women were strongly encouraged and supported to participate in the workforce continuously, often in full-time jobs. This historically higher labor market participation means that women in the east have accumulated more pension contributions and entitlements than their western counterparts.
Pensions in Germany are largely based on lifetime earnings and contributions to the pension system. Due to more continuous work histories, women in eastern Germany earn higher pensions than women in western Germany, where interrupted employment (due to childcare, part-time work, or earlier exit from the labor force) is more common. This leads to a significantly smaller gender pension gap in eastern Germany (about 16%) compared to a much larger gap in western Germany.
Beyond employment history, challenges like the complexity of pension sharing in divorce, part-time work prevalence, and private or occupational pension gaps also affect women's overall pension income. However, the regional difference is mainly explained by labor participation patterns.
In summary, the historically higher and more stable employment of women in eastern Germany leads to higher pension payments compared to women in the western states, who have more fragmented work histories resulting in lower pension entitlements. This trend is expected to continue unless policies are implemented to address the underlying causes of the gender pension gap in western Germany.
- Diversity-and-inclusion in the workplace and personal-finance management are critical areas where educational seminars and skills-training could focus on closing the existing gender disparities.
- In the business sector, particularly in wealth-management, addressing the root causes of the gender pension gap could lead to increased profits and clientele, as more women seek financial advice and planning.
- Given the significant difference in pensions between east and west, job-search platforms and career-development resources could provide information on employment opportunities and full-time positions in the eastern states for those seekingstable income and higher pension benefits.
- As more policies and initiatives are developed to promote diversity-and-inclusion, it is essential to consider the impact on personal-finance and wealth-management for women, especially regarding pension benefits and retirement planning.
- The study also emphasizes the importance of education-and-self-development, particularly for women in the western states, to understand the complexities of finance, pensions, and career development, which may help bridge the current gap in employment histories and pension income.
