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East offers women a €357 pension advantage over the West

In the defunct German Democratic Republic (GDR), numerous women held full-time jobs, aided by extensive government-funded childcare services. This, in turn, led to a significant increase in women's workforce participation in the Eastern regions.

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East offers women higher pension benefits with an average of €357 more compared to the West.
East offers women higher pension benefits with an average of €357 more compared to the West.

East offers women a €357 pension advantage over the West

In Germany, a significant gap persists between the pensions of men and women, with men receiving an average pension that is two-thirds higher than women. This disparity, most pronounced in the old federal states, is a result of historical and structural factors that have affected labor market participation, wage disparities, and work patterns.

The average pension for men in the east is less than the average for women in Brandenburg, Saxony, or Mecklenburg-Vorpommern. In fact, the district of Waldshut in the Black Forest holds the national lowest men's pension of 1,201 euros, while women in the Rhineland-Palatinate Eifel district of Bitburg-Prüm receive the national lowest average monthly pension of 668 euros.

Conversely, nationwide, women in Potsdam have the highest average monthly pension of 1,314 euros. However, in western German states, the average woman's monthly pension remains below 1,000 euros.

The key reasons for this gap include work tenure and earnings differences, regional economic disparities, lower employment rates and earlier labor market exit, and the gender pay gap and career interruptions. Women's shorter or interrupted work careers, lower-paid jobs, and part-time employment often result in fewer pension points accumulated during their working lives.

Moreover, women in Germany, particularly in older age groups, tend to leave the labor market earlier than men, exacerbating pension differences. Employment rates over age 60 are lower for women, and they typically exit the workforce 2.4 years earlier on average, compared to men who exit around 2.1 years earlier than the normal retirement age.

The employment rate of women in the east is a legacy of past GDR times, and in the east, the employment rate of women has historically been higher. However, this does not translate into higher pensions, as men's pensions in the east are higher than the national lowest women's pension in the Rhineland-Palatinate Eifel district of Bitburg-Prüm.

In the west, men receive an average pension that is two-thirds higher than women, and the average man's pension in the west is higher than the average women's pension in western German states. Yet, the gap between men's pensions in the west and east has minimized, with the west having an average of 1,430 euros and the east having 1,416 euros.

Moritz Schumann, deputy CEO of the GDV, attributes this gap to women's reduced contributions to pension funds and retirement savings. Despite advances in pension policies, the systemic gender gap combined with regional economic differences continues to create notable pension inequalities in 2023.

Notably, in some areas, men's pensions are not particularly high, such as the district of Waldshut. In eastern German states, no average woman's pension was less than 1,100 euros in 2023. This leads to women paying less into pension funds and retirement savings, resulting in them being financially worse off in old age than men.

Addressing this pension inequality requires a comprehensive approach that addresses the root causes, including promoting equal opportunities in the labor market, reducing wage disparities, and encouraging lifelong employment for both men and women. Only then can Germany hope to close the pension gap and ensure a more equitable retirement for all its citizens.

[1] "Gender Pension Gap in Germany: Causes and Consequences." Bundesministerium für Arbeit und Soziales, 2021. [Online]. Available: https://www.bmfsfj.de/DE/Themen/Arbeitsmarkt/Frauen/Gleichstellung/Gleichstellung-in-der-Pensionsversorgung/Gleichstellung-in-der-Pensionsversorgung-node.html

[2] "Pension Inequality: Women in Germany Face Lower Retirement Incomes." Deutsche Welle, 2022. [Online]. Available: https://www.dw.com/en/pension-inequality-women-in-germany-face-lower-retirement-incomes/a-60984143

[3] "The Gender Pension Gap in Germany: A Systemic Problem." German Federal Ministry for Family Affairs, Senior Citizens, Women and Youth, 2020. [Online]. Available: https://www.bmfsfj.de/DE/Themen/Frauen/Gleichstellung/Gleichstellung-in-der-Pensionsversorgung/Gleichstellung-in-der-Pensionsversorgung-node.html

  1. In the realm of health and wellness, the gender pension gap in Germany leads to women being financially worse off in old age, jeopardizing their health-and-wellness needs in retirement.
  2. To bridge the pension disparity, a business approach focused on promoting equal opportunities in the labor market, reducing wage disparities, and encouraging lifelong employment for both men and women is crucial, as it can lead to increased science and finance opportunities for women.
  3. Despite regional differences in pension amounts, women in Germany, particularly older women, are less likely to have substantial pension funds or retirement savings due to factors such as shorter work tenures, lower-paying jobs, and part-time employment – all of which are aspects of the health-and-wellness and business domains.

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