Pension benefits are 190 euros greater in the eastern regions compared to the western regions.

East's retirement benefits are 190 euros superior compared to the West - Difference in Pension Rates: East versus West Explained

In the three decades following German reunification, a significant shift in pension levels between the old and new federal states has been observed.

The cost of living, especially rent, remains much cheaper in the new federal states compared to the old. This, coupled with historical factors, has led to a notable difference in pension levels.

Initially, pensions in the east were historically lower than in the west. However, after reunification, a formula was developed for pensions to increase in stages with wages, productivity, and cost of living in East Germany. This process, shaped by political decisions at the federal government level, was designed to align East German pensions with West German standards.

As a result, pensions in the new federal states, on average, amount to around 1350 euros, significantly higher than the 1160 euros in the old federal states. The highest pensions are in Brandenburg, followed by Saxony. East Berlin has the highest average pension at 1433 euros.

One of the key factors contributing to this difference is the employment landscape during the German Democratic Republic (GDR) era. Pensions for women are much higher in the east due to more comprehensive childcare and greater employment expectations. Conversely, in the West, fewer kindergartens and a private approach to child-rearing led to many women taking a long break from work.

Another factor is the pension system itself. During reunification, pension systems in the East were merged into the pension insurance system, compensating for some of the difference in pensions. Additionally, a conversion factor for pension fund contributions in the East ended in 2024.

However, there are still discrepancies. In the West, more retirees switch from pension funds to occupational pension systems, resulting in lower pensions and a reduction in the average pension. Moreover, less collective bargaining coverage in companies in the East, and wages that are still lower than in the West, contribute to these differences.

Unemployment was higher in the new federal states after reunification. Yet, the number of insurance years among elderly retirees in the East is significantly higher compared to the West.

The process of equalizing pension levels between east and west has been completed for two years now. While the landscape has changed significantly since reunification, the differences between the old and new federal states continue to evolve.