Effective retirement benefit

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Pension benefits (AVWL) are collective ( collective agreement ) or individual ( employment contract ) benefits agreed between the employer and the employee to build up an additional private or company pension scheme for the employee. AVWL are a further development of the capital-forming benefits (VL). AVWL are earmarked wage benefits from the employer, which are paid into the employee's retirement provision .

The background to this is the collective bargaining agreement that came into force on October 1, 2006, between the collective bargaining parties IG Metall and Gesamtmetall (TV AVWL) . Employees in the metal and electrical industry receive an annual cash benefit of currently EUR 319.08 (trainees EUR 159.48) from their employer. This money either goes into an eligible private pension plan or into a pension commitment from the employer. The cash payment is excluded. Depending on the type of investment, the state grants different benefits.

Types of plants of the AVWL

  • Private old-age provision according to § 10a and § 82 ff. EStG (Riester subsidy). The employer pays contributions for a Riester pension taken out by the employee . The employee can voluntarily increase the contribution payment in order to receive the maximum state subsidy.
  • Conversion of wages into a pension commitment from the employer. Parts of the wages are used for a company pension and are not paid out. No taxes or social security contributions (if any) have to be paid for these contributions. In the retirement phase, taxes and, if necessary, health and long-term care insurance contributions are duedownstream.
  • Company pension based on a voluntary company agreement . These benefits are exempt from taxes and social security contributions for employees. With this variant, the ancillary wage costs for the employer are permanently reduced through the savings in social security contributions.

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