What is the annuity factor and what is a good value?
In short
What is the annuity factor and what is a good value? The annuity factor (Rentenfaktor) tells you the monthly pension you get per EUR 10,000 of policy value: at 30, EUR 100,000 gives EUR 300 a month, at 20 only EUR 200. New German contracts often guarantee only 20 to 28. A good value is a guaranteed factor of about 28 or more that the insurer cannot cut later.
Published values and calculation figures for the German annuity factor, 2026.
Example
Typical range
Guaranteed factor in new contracts
often EUR 20 to 28 per EUR 10,000
Factors in the 1990s
EUR 40 to 50 per EUR 10,000
EUR 100,000 at factor 30 instead of 20
EUR 300 instead of EUR 200 a month
Difference by age 90 when starting at 67
about EUR 28,000
Maximum rate for reserves
1 percent
Factors differ by insurer, tariff and year of signing.
The threshold of about 28 for a good value is an estimate from quoting practice.
The table is our own calculation without increases.
Worked example
Two offers, EUR 120,000 at age 67
Offer A shows a current factor of 32 and guarantees 22. Offer B guarantees 28 and rules out later cuts.
A at current factor 32
EUR 384 a month, not certain
A at guaranteed factor 22
EUR 264 a month
B at guaranteed factor 28
EUR 336 a month
Difference in guarantees over 20 years
EUR 17,280
B is the better offer although A advertises the higher number. Always calculate with the guaranteed factor.
How to calculate with the annuity factor
Divide your policy value by 10,000 and multiply by the factor. With EUR 150,000 and a factor of 26 you get 15 times 26, so EUR 390 a month. In unit linked contracts the value is only known at the start of the pension, while the factor is often fixed today.
The table shows for EUR 100,000 without annual increases how long it takes until your capital has come back. Starting at 67 with a factor of 28, you would need to live to almost 97.
Annuity factor
Monthly pension from EUR 100,000
Capital back after
Age if starting at 67
20
EUR 200
41.7 years
108.7
25
EUR 250
33.3 years
100.3
28
EUR 280
29.8 years
96.8
30
EUR 300
27.8 years
94.8
35
EUR 350
23.8 years
90.8
Guaranteed versus current factor
Many contracts state two values: a higher current factor and a lower guaranteed one. Only the guaranteed factor is certain. The current factor applies until the insurer changes it.
Check whether the guaranteed value also applies if you start your pension earlier or later. Moving the start date can trigger a new calculation.
Which value is good
In the 1990s factors of 40 to 50 were common; today new contracts often guarantee only 20 to 28. The reasons are rising life expectancy and low interest; the maximum rate insurers may use for their reserves is currently 1 percent.
A guaranteed factor of about 28 or more for a start at 67 counts as good. Just as important is that the insurer cannot lower it through a trustee clause (Treuhänderklausel). A high factor that is only current is worth less than a slightly lower guaranteed one.
If your insurer cuts the factor
Under the German Insurance Contract Act an insurer may only change benefits if the need for benefits has changed permanently and unforeseeably and an independent trustee confirms it (section 163 VVG). Several insurers have used this to cut factors in older contracts, one by 9 percent in 2021.
On 10 December 2025 the Federal Court of Justice declared invalid a clause in a unit linked Riester pension that allowed the insurer to reduce the pension one sidedly (IV ZR 34/25). Check your annual statements. If your factor was cut, you can demand a return to the original value; back payments become time barred after three years from the end of the year.
When you do not need an annuity
If you do not expect to live very long, or can draw down your savings in a planned way, a broadly diversified savings plan is often more flexible. An annuity mainly makes sense if you want to insure the risk of outliving your money.
Step by step
Find the guaranteed factor in the contract, not just the current one.
Calculate the pension for your expected policy value.
Check whether a trustee clause allows a later cut.
Read every annual statement for changes to the factor.
If it was cut, demand the original value in writing.
Checklist
Guaranteed factor known in writing
Validity for your planned start date checked
No one sided reduction clause
Guaranteed payment period or lump sum option included
Costs compared with a savings plan
Common mistakes
Calculating with the current instead of the guaranteed factor
Missing a cut in the annual statement
Moving the pension start without checking the new calculation
Confusing it with the Rentenfaktor used for the state pension
Questions and answers
Frequently asked
What does an annuity factor of 25 mean?
You get EUR 25 a month per EUR 10,000 of policy value, so EUR 250 from EUR 100,000.
May the insurer lower the factor?
Only under the strict conditions of section 163 VVG.
A one sided reduction clause was ruled invalid in 2025.
Does this also apply to Rürup and company pensions?
Yes, they use annuity factors and similar clauses too.
