Save taxes and draw more pensionRürup pension (basic pension)

The Rürup pension was introduced on 01/01/2005. It is quite similar to the statutory pension insurance and guarantees a monthly pension payment starting from age 62 at the earliest. This pension cannot be lent, it cannot be bequeathed, sold, transferred or capitalised.

Those who can dispense with flexibility will be rewarded here. In 2018, 86 percent of the contributions will be tax deductible. By 2025, this percentage will increase by two percent annually. The Rürup pension is particularly useful for the self-employed; otherwise the self-employed usually do not get tax relief for their pension contributions.

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The basics

You are individually responsible for your retirement provision

The Rürup pension (basic pension) is a private pension insurance with which you can provide for your old age on your own responsibility. Lifelong pension benefits with good returns are guaranteed here.

High returns through tax advantages

Due to the significant tax incentives, the Rürup pension is particularly attractive for the self-employed and freelancers. With the statutory pension, the contributions of insured persons flow directly to pensioners the following month. On the other hand, your Rürup pension accrues and it will be paid out directly to you later – with a secure interest rate added.
Thanks to its tax advantages, the return on the Rürup pension is significantly higher than the interest for other forms of investment.

Additional module for disability insurance

In addition to the Rürup pension, additional modules can be taken out to cover occupational or general disability. It is also possible to agree on variable contribution payments or periods without contributions.

Products of the Rürup pension are “Hartz-IV safe”. They are therefore not counted as assets in the means test for receiving unemployment benefit II.

Subsidy concept

Father state subsidises through tax breaks

The Rürup pension offers the following tax benefits: Together with your pension insurance contributions, you may incrementally deduct the contributions to your Rürup contract from your taxable income as special expenses. This occurs as part of the expenses incurred for retirement provision – up to €23,712 per year for single persons. For spouses, this amount doubles to a maximum of €47,424.

A transitional arrangement applies for the years 2005 to 2025: In 2018, you can initially claim 86 percent of your old-age provision contributions to the Rürup pension and statutory pension insurance as tax deductible contributions. In subsequent years, the share increases by two percent annually. Thus your contributions will be taken into account 100% in 2025.

It should be noted, however: The contribution that is deductible as a special expense is reduced by the employer contribution to your statutory pension, which is already tax-free.

Personal provision is important

The statutory pension is in a state of crisis

The statutory pension is facing a crisis. Fewer and fewer insured people are paying for more and more pensioners. There is no end in sight to this fatal development.

Consequently, today individual responsibility is more important than ever before. If you want to live without financial worry after retirement, you must make private provisions in good time.

Be independent, make your own provisions with the Rürup pension

The Rürup pension is a form of private old-age provision. Private provision also includes endowment insurance, savings deposits, securities or residential property. The state promotes private pension schemes through special subsidies and tax breaks.

With the statutory pension, the contributions of insured persons flow directly to pensioners the following month. On the other hand, contributions to private pension plans, including state allowances, are accumulated. Later they are paid out again as lifelong pensions – plus interest and compound interest.

The contribution phase

Flexible deposit

As a Rürup saver, you can pay-in flexibly – as your finances allow. If there are bottlenecks, you can even agree with your contract provider to suspend contributions for a specific period of time.

Growing tax incentive

However, regular contributions are recommended for an optimal old-age provision. The contributions to your Rürup pension are tax deductible: At 86 percent in 2018 (together with contributions to the statutory pension) – increasing by two percent each year thereafter. From 2025 you can then claim your contributions in full.

Tip: As a supplement to the Rürup pension, many providers offer additional modules for protection against disability. Financial protection in the event of occupational disability is becoming increasingly important. Since there is little reliance on statutory benefits in the event of illness-related career exit.

The pension phase

At the earliest from 62

As a rule, payments from your Rürup pension plan start when you reach the statutory retirement age (between 65 and 67, depending on year of birth). As an insured person, however, you can apply for benefits starting at age 62. In this case the pension payments are of course lower than they are for disbursement starting from the statutory retirement age.

The benefits from Rürup pensions are always paid as a monthly pension – lifelong, regardless of your age.

Pension provision also for the family

Claims from a Rürup pension are not inheritable. However, you can agree on a survivor’s pension for your spouse or children when you enter into the contract.

The claims arising from a Rürup pension may not be transferred, loaned or sold (like statutory pension claims). Likewise pay-out in a one-off amount is not possible. Starting from the year 2040 Rürup pensions paid out for the first time are fully taxable. Until then, a transitional rule will apply.

The right contract

Many suppliers, numerous products

Orientation in the maze of pension product offerings is not easy. Do you want to close your personal pension gap with a Rürup pension? Here you will find a large number of suppliers with a large number of different products.

Do not forego advice

Think of your personal pension gap and your income and financial circumstances when planning your private provision. Optimal use of tax incentives must also be taken into account. You should therefore attach importance to thorough consultation.

For whom is this suitable?

Tailored for the self-employed

Due to the boundary tax conditions, the Rürup pension is particularly suitable for the self-employed and freelancers. During their working lives, members of these groups often do not acquire any entitlement at all to a statutory pension. Thus they must take full responsibility for their own retirement.

Due to the high tax allowances, you can also invest larger amounts in your Rürup pension. At the same time, you benefit from state subsidies.

In conjunction with the Rürup pension, if you insure yourself against disability, the protection also applies before you reach retirement age.

Employees can also benefit

As an employee with a statutory pension entitlement, you must make additional provisions today. The Rürup pension is an effective supplement to the statutory old-age provision. It can sustainably help to close your personal pension gap. Employees, as well as freelancers and self-employed persons benefit uniformly from the tax incentives of the Rürup pension.

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