History of the German pension scheme

When it comes to pension schemes, Germany can look back upon a tradition older than a hundred years. Everything started in the times of Bismarck, who advised Emperor Wilhelm to establish social insurance. Of course, the benefits old and sick people could get back then were not yet comparable to those that the modern pension scheme of the FRG was to offer its citizens later. For instance, it was only possible from 1891 on to obtain an old-age pension if one was 70 years old – bearing in mind that the average life expectancy was 45 years at the time.

The Imperial Insurance Code in 1911 signaled the next step towards a modern pension scheme. From that point on, it was also for example lawfully provided that the bereaved were looked after by the state if they could not sustain themselves after the death of their spouse.

If we go forward a few decades in history and concentrate on the developments of the young federal republic, one has to pay attention to the pension reform of 1957: it was here that the pay-as-you-go scheme that is so typical for Germany was introduced, as well as a pension formula that calculates the earnings during old age based on the obtained earnings during the time in gainful employment. Later, in the 1970s, another important change followed: The retirement age was shaped more flexibly and now, self-employed people, students and housewives could profit of the lawful pension insurance.