Pension Plan
Do you want to remain financially independent in old age? Then it's important to take the right steps early on. In most cases, the statutory pension is not enough to secure your accustomed standard of living after retirement. Individual planning for your retirement is therefore crucial. At tecis, we help you to determine your expected statutory pension and calculate the pension gap. Together, we will develop a tailor-made solution for your retirement provision.
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One of our retirement specialists is ready to help you create a personalized plan that ensures your financial independence in the future.
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Statutory pension insurance will generally not be sufficient to maintain your accustomed standard of living in old age, as it primarily offers basic provision. The amount of the statutory pension is based on the income earned during working life and the contributions paid in. However, due to demographic trends - an increasing number of older people combined with falling birth rates - fewer and fewer people are paying contributions to finance pensions. This means that the statutory pension will probably be lower in the future, especially for people with low incomes or interrupted employment histories.
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In addition, statutory pension insurance will only cover part of the income required in old age. The pension formula does not take into account all the costs of living, especially individual wishes and needs in retirement. Many people want to maintain their accustomed quality of life in old age, travel or pursue hobbies more intensively. Without private pension provision, it will be difficult to realize these wishes, as the statutory pension alone does not provide enough leeway to maintain the standard of living. Early and targeted private provision is therefore essential to close the pension gap.
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The amount of state pension you can expect in old age depends on various factors, such as your income, how long you have been paying into the pension insurance scheme and your general pension contributions. A rough guide to what percentage of your last net income you could receive as a pension is as follows:
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Average pension rate: for most employees in Germany, the statutory pension averages around 40-50% of their final net income. This figure can be higher or lower depending on the factors mentioned.
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Example of a standard calculation: If you have paid into the statutory pension insurance scheme for around 45 years and have earned an average income, you can expect a pension that corresponds to around 45% of your last net income.
Why it won't be enough
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​Fewer people paying contributions (falling birth rates, increasing life expectancy) lead to a strain on the pension system.
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The statutory pension only covers part of the income and is often not enough to maintain the accustomed standard of living.
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Pensions offer no allowance for individual wishes (e.g. travel, hobbies) or higher living costs in old age.
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People with lower incomes or interrupted employment histories receive an even lower statutory pension in old age.
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The statutory pension is not tailored to personal needs and offers little scope for individual life goals in retirement.
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The amount of the statutory pension can be reduced by political reforms and changes to pension formulas.
The biggest issue
Demographic change is one of the biggest challenges facing the pension system. Life expectancy is increasing in Germany, while the birth rate is falling at the same time. This means that fewer and fewer young people are paying into the pension system, while more and more people of retirement age are dependent on state benefits. This development is leading to an increasing burden on the statutory pension funds, as the number of pensioners is growing significantly while the number of contributors is falling.
The result is a larger financial gap that can no longer be covered by statutory pension insurance alone. For the future, this means that the statutory pension will probably no longer be sufficient to ensure the standard of living we are accustomed to, which is why private pension provision is becoming increasingly important in order to financially secure our retirement.
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Your Options
There are many ways to ensure your financial security in old age.
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Here are some of them:
Investmentplan as a private pension insurance
With a private pension insurance you combine pension insurance with
investment in mutual funds (funds) according to your according to your wishes and risk appetite.
At the start of your pension, your fund units are sold and a lifelong pension is formed from the capital.
If you do not wish to receive a pension in old age, you can you can usually choose to have your capital earmarked for annuity alternatively pay out the capital intended for retirement or, if you wish, have the entire fund units transferred to your to your private bank account.
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The contributions to the private pension insurance are not tax-privileged in the savings phase.
You can however benefit - under certain conditions - from a significant tax-reduction compared to a regular investment plan and only a small portion of the lifelong pension is due to taxation.
Basic pension insurance
The personal basic pension, also known as the Rürup pension, is one of the state-subsidized forms of forms of private pension provision.
In 2023, 100 percent of the contributions for the contributions for the personal basic pension can be can be deducted from tax - up to a maximum of 27,565.20
euros for single people and 55,130.40 euros for married couples (with joint taxation).
Like the statutory pension and the Riester pension, the personal basic pension
pension is taxable in the pension phase, for compulsory members of
the statutory health insurance scheme (GKV) however, there is no obligation to pay contributions to the statutory health and long-term care insurance.
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The basic pension insurance has two drawbacks that need to be considered:
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No capital payout
Benefits are paid exclusively at the earliest after 62nd year of age only as a lifelong pension.
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No termination possible
The contributions can still be lowered to zero.
The savings will then compound and be paid out as a lifelong pension under the condition above.
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It is therefore necessary to be sure that you want to spend your working life and also your retirement in Germany.
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Riester pension
As an eligible Riester saver, you are directly entitled to a state subsidy, which alone can generate an attractive return.
Please note that payouts at retirement age and partial payouts (maximized
to 30 percent of the capital) are subject to tax.
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Possible state subsidies through subsidies and tax-deductions:
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Personal subsidy: 175,00 Euro p. a.
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Children subsidy:
- 185.00 Euro p.a. for children born up to 31.12.2007
- 300.00 Euro p.a. for children born after 01.01.2008
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Tax deductable contribution: Up to 2,100.00 euros on the annual contribution
To receive the full subsidization, 4% of the previous year's gross salary (less allowances) must be paid into the Riester contract each year.
Company pension plan
The company pension plan is also an
attractive way to significantly increase your future pension.
Its main advantage:
The pension contributions are converted from your from gross income - this reduces taxes and social security contributions.
Through deferred compensation, part of the salary is directly salary is invested directly in the company pension insurance, which will be offered by your employer.
If you change your employer, you can usually usually take your insurance with you and continue it at the new company.
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Like the statutory pension,this pension, pension is taxable in the pension phase. In addition full contributions to statutory health and long-term care insurance need to be paid.
If applicable a tax-free amount for the health insurance
contributions on the pension benefits can be claimed.
Those with private health insurance do not have to pay any health insurance contributions and long-term care contributions on their benefits.
Whether through private pension insurance, real estate or an investment plan - with the right strategy, you can build up your capital for retirement today and thus provide for the future. Our experts will help you find a solution that is optimally tailored to your financial goals and personal circumstances. After all, everyone has different ideas about their life in old age, be it traveling, a carefree life without financial restrictions or ensuring prosperity for their family.
We help you to calculate exactly how much you should set aside for your retirement provision in order to realize these wishes. We take into account all relevant factors such as inflation, taxes and possible market risks. With the right planning, you can ensure that you don't have to rely solely on the state pension in old age, but can maintain your quality of life and realize your dreams. Act now and secure a stable and carefree future - the earlier you start, the more you can benefit!