A retirement without worries? Employers play a bigger role than you might think.
Old-age poverty often sounds like something that happens to “other people.” Yet the numbers tell a different story: according to the German Federal Statistical Office, nearly one in five people over 65 in Germany is at risk of poverty – a clear rise compared with a decade ago. Causes range from interrupted career paths and low wages to periods of unemployment.
Where the state passes on societal responsibility, retirement security becomes a matter for employers. Financial stability in later life is increasingly a deciding factor for employees when choosing where to work. One thing is clear: the state pension alone is not enough.
Why the risk is growing
The baby-boomer generation has passed; birth rates in Germany are falling, while living standards rise. Many current retirees faced periods of mass unemployment or insecure work between the 1980s and early 2000s, leaving gaps in contributions and pension points.
At the same time, opportunities to build income during retirement are limited. While some senior households have assets, the differences are stark. Many at the lower end have barely any savings, leaving them vulnerable.
What companies can do right now
Political measures such as the debated “Boomer-Solidarity Levy” – an extra charge on pensions above €1,048 – are contentious and, if introduced at all, would take years to have effect. The problem: it is essentially just a cut to pensions. And who counts as a “wealthy retiree”? The average state pension in Germany is around €1,500 gross for men and considerably less for women: hardly a benchmark for wealth!
Falling pension levels make the issue more urgent: fewer contributors and more claimants mean that someone just above the poverty line today could fall below it tomorrow, and still be hit by additional charges. The Boomer levy feels more like symbolic politics than a real solution to the structural problem.
A faster, more effective approach is to tackle the issue where influence is real: in the workplace. Occupational pensions (bAV) are a proven tool, allowing employees to build a solid financial cushion over time with relatively modest contributions, supported by their employer. The key is that this should be experienced as a genuine benefit, not a bureaucratic obligation
From theory to practice
Two years ago, a medium-sized manufacturing company introduced a digital, transparent bAV scheme with streamlined administration. The result: high participation, satisfied employees, and predictable costs.
However, occupational pensions become truly attractive only when employers go beyond the statutory minimum contribution (15%). While 15% sounds good, for a €100 employee contribution, that’s only €15, whereas other benefits – such as gym memberships – are often subsidised at around €45 per month. Yet long-term financial security is far more fundamental. Physical fitness is valuable, but it cannot replace a stable financial foundation in later life.
To maximise the impact of bAV schemes, higher employer contributions are needed, alongside stronger government support to ease the burden for both companies and employees.
Conclusion: Provision is care
Employees spend decades at work: their time and effort deserve security that extends beyond their careers. Old-age poverty is not just a statistic; it is a reality affecting many retirees.
A well-structured occupational pension is more than a financial tool: it signals appreciation, creates certainty, and strengthens employee loyalty. For companies, it is often cost-effective, as providing the same benefit through salary increases would be significantly more expensive.
In short, an employer’s care shouldn’t stop at retirement – it should be thought of for the long term.
At Degura, we help employers put these solutions in place simply and sustainably, so that pensioner poverty moves from everyday reality to rare exceptions.
*The EU-SILC survey is a Europe-wide dataset on income, poverty and living conditions. In Germany, the Federal Statistical Office uses it as the official primary source for measuring these issues. A person is considered at risk of poverty if their income is less than 60% of the median income.
