German pension terms, in plain English
German pensions come with a lot of jargon. Here are the terms that matter. Each one short, with an example. No fine print, promise.
Statutory pension
Rentenlücke (pension gap)
What you are short in retirement. Your needs minus your net pension.
Example: you need 2,000 €, you get 1,200 € pension. The gap is 800 €.
Entgeltpunkte (pension points)
The currency of your pension. One year on the average salary gives 1 point. In the end the sum of all points counts.
Example: earn twice the average, and you get 2 points that year.
Rentenwert (pension value)
What one point is worth per month. Your pension is simple: points times pension value.
Example: 40 points × 42.52 € = around 1,700 € gross pension a month.
Durchschnittsentgelt (average earnings)
The average salary of all insured people in a year. The benchmark for one point.
Example: in 2026 that is around 51,944 € gross a year. Earn that, get 1 point.
Zugangsfaktor (access factor)
A bonus or a cut depending on when you retire. Retire early, get less; later, get more.
Example: at 67 the factor is 1.0. Retire earlier and it drops, your pension stays smaller for good.
Rentenanpassung (pension adjustment)
The yearly rise of the pension. If it rises slower than prices, your gap grows.
Example: pension +2% a year, prices +3%. On balance you lose purchasing power.
Renteninformation (pension statement)
The letter the pension insurance sends you. It shows the pension you have earned so far.
Example: put the figures from the letter into the app, then it uses your real values.
Gross and net pension
Gross is before deductions. Net is what actually arrives. Only net counts for planning.
Example: 2,000 € gross, minus health/care and tax, leaves around 1,600 € net.
KVdR (health and care insurance for pensioners)
Health and care contributions come off the pension too. Roughly 12%.
Example: from 2,000 € gross pension, about 1,760 € is left after these contributions.
Besteuerungsanteil (taxable share)
The part of the pension you have to tax. It depends on the year you retire and rises each year.
Example: retire later, and a larger share of the pension is taxable.
Tax and saving
Grenzsteuersatz (marginal tax rate)
The tax rate on your next euro of income. It matters because many benefits start here.
Example: a payment you can deduct saves you tax at your marginal rate.
Purchasing power (today's value)
What an amount is worth in today's money. It lets you make sense of future numbers.
Example: 4,000 € in 30 years feels like around 2,200 € today.
Abgeltungssteuer and partial exemption
The tax on gains from an ETF, around 26%. For equity funds 30% of the gains are exempt.
Example: only the gain is taxed, not the money you paid in.
Ertragsanteil (income share)
With a private pension only a small part of the payout is taxed, not the whole pension.
Example: the later you draw the pension, the smaller this taxable part.
Nachgelagerte Besteuerung (deferred taxation)
Save tax today, pay tax on the payout in old age instead. The principle behind Riester and the Altersvorsorgedepot.
Example: it often pays off, because your tax rate is lower in retirement.
Ways to provide
ETF savings plan
You invest monthly in a broad equity fund. Flexible and cheap, but the value swings.
Example: 150 € a month over 37 years builds up a decent capital. More →
Private pension insurance
You pay in and get a lifelong monthly pension from retirement. Predictable, but less flexible.
Example: however old you get, the pension keeps paying. More →
Buy pension points
Pay extra into the statutory pension on purpose. You buy yourself more points, usually possible from 50.
Example: points are guaranteed for life. An ETF often brings more, but with no guarantee. More →
Altersvorsorgedepot
A state-subsidised investment account, planned from 2027. More support, but more rules.
Example: the payout in old age is taxed (deferred taxation).
Riester (existing contracts)
An older subsidised product. Hardly signed new any more, existing contracts keep running.
Example: if you already have one, you can include it in the app.
Rented property
AfA (depreciation)
You can deduct the value of the building over the years from tax. That lowers the tax on the rent.
Example: for a normal older building that is 2% of the building value per year.
Kaufnebenkosten (buying costs)
The extra costs when you buy: transfer tax, notary, land registry, often an agent. On top of the price.
Example: depending on the federal state, easily 10 to 15% on top.
Spekulationsfrist (speculation period)
Sell after 10 years and the gain is tax-free. Sell earlier and you pay tax on it.
Example: buy, sell at a profit after 12 years, the gain stays tax-free.
And now?
The app puts all of this together for your case. Local, no sign-up, no tracking. The basics are free.