Pension Shortfall Hits East Germany Hard: Over Half of Full-Time Workers Face Retirement Below the Poverty Line
Published on 07/20/2026 at 11:12 | Redaktion boerse-global.de
A new analysis from Germany’s Federal Ministry of Labour and Social Affairs paints a stark picture of retirement prospects, particularly in the country’s eastern states. More than half of all full-time employees in East Germany earn too little to qualify for a pension above the poverty threshold, even after a full 45-year working career.
State-specific numbers are particularly striking. In Saxony-Anhalt, 304,000 out of 503,000 full-time workers — or 60.4 percent — do not reach the necessary income. Nationally, the figure stands at 44 percent, while in the western states it is 42 percent.
The poverty risk threshold for a single retired person in 2025 is set at 1,446 euros gross per month. To reach that level after 45 years of continuous work, a person must earn at least 3,771 euros gross monthly throughout their career. That benchmark is missed by 54 percent of East German full-time workers.
Dietmar Bartsch, a member of the Bundestag for the Left Party, described the situation as “unacceptable” and called for a concerted push to raise wages. Eva von Angern, the Left Party’s parliamentary group leader in Saxony-Anhalt, echoed that demand and also insisted on a statutory pension level of 53 percent.
Against this backdrop of widening gaps, the federal government’s pension commission has unveiled its own reform proposals. The core plan involves a gradual increase in the retirement age starting in 2042 — by half a year each decade. The “pension at 63” scheme, which currently allows workers with 45 contribution years to retire early without deductions, would be scrapped.
A new element is a pay-as-you-go capital pension. From 2028, employers and employees would each contribute between 0.5 and 1 percent of gross wages, eventually rising to 2 percent. The investment returns are intended to lift the current pension level from 48 percent to 50 percent by 2050.
Two institutions are vying to manage the billions in contributions: the German Bundesbank and the state investment fund Kenfo. Kenfo has posted an average annual return of 5.8 percent since 2017 — significantly outperforming the Bundesbank, which the government’s economic adviser Martin Werding criticised for its “overly cautious investment strategy.”
Pushback is emerging from several quarters. The Social Association of Germany (SoVD) warned that raising the retirement age amounts to a hidden cut. Many employees, especially those in physically demanding jobs, may not be able to work longer due to health issues. The association also pointed to a lack of willingness among companies to retain older staff.
The crafts sector is particularly alarmed. One roofing contractor in Saxony-Anhalt told a local newspaper that the current 45 contribution years already mark the limit of what his employees can endure, and any further extension would be “hardly feasible.” Surveys by the German Trade Union Confederation (DGB) back that view: more than one in three employed people doubt they can remain healthy enough to work until the current retirement age.
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