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For a flexible retirementPrivate pension insurance

Increasing life expectancy, pension gap, old-age poverty: Many factors make a private pension scheme more and more important. For instance, the statutory old-age provision has been drastically reduced in recent years. A private pension provision, on the other hand, ensures you of retirement without financial worry.

Private pension insurance has a big advantage: Here the pension is paid for life. Even if mathematically the capital has already been used up. The average life expectancy serves as the basis. If the insured dies shortly after he or she retires, pension payments are normally stopped. However, you can also agree on a pension guarantee period of e.g. 5, 10 or 15 years in favour of the heirs. In the event of death, the provider continues to pay the pension in this case.

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The basics

Private pension insurance is an independent old-age provision on your own responsibility. You can use it to close your personal pension gap. Thus you secure your entitlement to a guaranteed lifelong pension – regardless of how long you live.

The state can no longer guarantee this kind of security. This is because year-to-year there are more pensioners than there are persons who are paying into the statutory pension system. Statutory pensions and pensions for civil servants must therefore be further reduced. For you, this means more personal responsibility in the planning of your financial life. At the same time, you also have new possibilities for designing your retirement provision in accordance with your own plans.

Contract variants

As a customer, you choose how to structure your insurance coverage. You can choose between deferred pension insurance, immediate annuity or pension insurance with a lump-sum option.

Deferred, immediate or with the lump-sum option

You regularly pay monthly contributions into a deferred pension insurance scheme during your active working life. When you retire, you receive a lifelong agreed pension plus profit participation.
The immediate annuity is particularly attractive for “best agers” over the age of 60: You pay a larger amount of money once and your regular pension starts immediately.
For pension insurance with lump-sum option in retirement you have the free choice between pension for life or a one-off, high lump-sum payment.

Advantages of private pension insurance

With the statutory pension, the contributions of insured persons flow directly to pensioners the following month. On the other hand, your contributions to private pension insurance accrue for you personally. Later, they are paid out to you for life, plus a guaranteed interest rate.

The future risk of the statutory pension therefore does not exist with private pension insurance.

More flexible than Riester or Rürup products

Unlike life insurance, a medical exam is not required when taking out a private pension policy. The lump-sum option makes private pensions more flexible than pension products based on the Riester or Rürup model. When you retire, with a private pension you have the choice: Life-long pension or direct disbursement of the saved capital.

Private pension insurance offers the possibility of agreeing on additional risk protection in the same contract. This can be disability insurance, accident insurance or surviving dependents’ insurance.

Suitable for whom?

A private pension insurance is suitable for virtually anyone. The deferred variant is particularly attractive for younger persons or middle-aged persons. With the deferred variant they can regularly make provisions for old age over a longer period of time with favourable contributions.

Would you like to invest a larger amount of money (e.g. from a life insurance policy, bank investment or inheritance) in your own pension scheme? Depending on age, in this case we recommend a deferred annuity against a one-off contribution or also an immediate annuity.

Do you want to remain flexible after retirement, for example, because you want to buy a retirement home under sunny southern skies? For a policy with a lump-sum option, you can choose immediate disbursement of the pension in one lump sum.

Tax treatment

Contributions to private pension insurance policies taken out after 31 December 2004 are no longer tax-deductible as special expenses. This is different than the situation with the Riester pension or Rürup pension.

Thus you pay the contributions to your private pension from your net income. This doesn’t have to be a disadvantage. Since only a small portion of the later pension payments is taxed. Because the personal tax rate at an older age is usually much lower than it is during active employment, often there are even tax advantages.

Special case – lump-sum payment

For a private pension with capital disbursement, you must pay full tax on the income if the contract was entered into after 2004. “Income” is the difference between your contributions and the sum insured that is paid out. Similar to the interest you earn with an investment at the bank.

Tip: Do not have your capital paid out until after you have reached the age of 62 (or 60 if you take out your policy before 01/01/2012) and after twelve years have elapsed. In this case, you only have to pay tax on half of the income.

Unit-linked pension insurance

With unit-linked pension insurance you close your personal pension gap. During your active working life, you pay contributions – thereafter you receive your monthly private pension for the rest of your life. Unit-linked pension insurance differs from a “normal” private pension through the investment method: With unit-linked annuities, the insurer invests part of the contributions in equity funds or bonds.

Benefit from the growth opportunities of the markets

Unit-linked pension insurance allows you to profit from the opportunities of the stock markets – without having to constantly track your investment in the business press. The earnings potential of a unit-linked pension is higher than that of a traditional pension insurance contract. However, when the stock market is down, the return can also be lower. If you choose a product with a Riester subsidy, you will also receive solid additional subsidies from the state.

Low-price package with disability and long-term care insurance

Taking out unit-linked pension insurance is uncomplicated. A medical exam is not required.

Tip: You can combine your disability or long-term care insurance with unit-linked pension insurance at a favourable price.

Finding the right contract

Private pension insurance, Riester or Rürup pensions, life insurance, unit-linked pension products… the range of old-age provision variants often shows a confusing variety. Nevertheless, everyone knows that an individual private pension scheme is almost indispensable these days.

Play it safe through good advice

Have you decided to close your pension gap privately? Here you are confronted with a multitude of providers, products and rates.
Do not be in a hurry to decide on a specific offering! This means that taking out a private pension online is not recommended. The issue is complex and extremely detailed.

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