Rürup pension

The basic pension , known colloquially as the Rürup pension after the economist Bert Rürup , was introduced in Germany in 2005 as a tax-privileged form of private old-age provision . It thus came alongside the company pension scheme , the Riester pension and the “classic” private pension insurance . Because of its performance criteria and tax treatment that deviate from these types of contract, the basic pension is a cheap alternative, especially for people who have a higher taxable income in the savings phase and / or who are unable to claim a Riester pension due to a lack of compulsory statutory pension insurance , for example because they are self-employed are or are required to contribute to a pension fund . The premiums can - in an increasing percentage and limited in amount - be deducted from the total amount of income as special expenses in accordance with Section 10 (1) No. 2 b) EStG. The creditable percentage is 88% in 2019. In 2019 the maximum amount is EUR 24,305 per year (for married people: EUR 48,610); this results from Section 10 (3) EStG, which links the amount of deductible pension expenses to the contribution assessment limit for miners' pension insurance.

In contrast to the statutory pension, the basic pension is not pay-as-you-go , but funded by insurance . The basic pension differs from the classic private pension insurance and the Riester pension, among other things, in that there is no right to choose from a capital option, i.e. the claims cannot be paid out in the form of a maturity sum. Instead, basic pensions must always be paid out, i.e. paid out as a lifelong pension. In contrast, the entitlement to benefits acquired in the private pension insurance can be paid out in full as a one-off amount - up to 30% for the Riester pension.

requirements

The contributions to build up a Rürup pension are only deductible as special expenses under the following restrictions and conditions :

The insurance contract or fund savings plan must be certified by the Federal Central Tax Office.
Within the framework of the statutory maximum amounts according to the Retirement Income Act (currently 25,046 euros per year for single people and 50,092 euros for married people).
If the contract is signed before January 1, 2012, the basic pension must not begin before the age of 60, and if the contract is concluded after December 31, 2011, it must not begin before the age of 62.
Claims from the contract are not inheritable outside of a narrow subscription right, nor can they be loaned or sold ( Section 10 Paragraph 1 No. 2b, aa, sentence 2 in conjunction with Paragraph No. 2 Sentence 2 EStG ).

Tax treatment

For the tax treatment of the basic pension, a distinction must be made between two phases, the qualifying phase (savings phase), in which the contributions are paid, and the benefit phase (pension phase).

Savings phase

Basically, contributions to Rürup contracts, as well as contributions to the statutory pension insurance, can be claimed as special expenses. However, the contributions are limited to a fixed maximum contribution. This maximum amount was € 20,000 (single) and € 40,000 (married jointly assessed) until 2014. Since 2015 it has been linked to the maximum contribution to the miners' pension insurance. This consists of the contribution rate to the miners' (2020 24.7 percent) and the related income threshold (2020: 101 400 € / year) together and is adjusted annually. For taxpayers residing in eastern Germany, the maximum contribution to the miners' pension insurance west is decisive when calculating the maximum deductible special expenses. For employees, both the tax-exempt employer contributions and the employee contributions to the statutory pension insurance are deducted from the maximum amount quota. In the introductory phase of the basic pension (2005 to 2025), contributions made (up to a maximum of the maximum amount) can only be partially claimed as special expenses: When the basic pension was introduced in 2005, the deductible amount as special expenses was 60% of the contributions paid. Since then, the percentage has increased annually in 2% steps ( Section 10 EStG) and will ultimately reach 100% of the premium raised by 2025.

Savings phase 2005-2014: maximum deductible special expenses (example: single people)
Tax year	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014
Maximum amount	€ 20,000	€ 20,000	€ 20,000	€ 20,000	€ 20,000	€ 20,000	€ 20,000	€ 20,000	€ 20,000	€ 20,000
proportion of	60%	62%	64%	66%	68%	70%	72%	74%	76%	78%
amount	€ 12,000	€ 12,400	€ 12,800	€ 13,200	€ 13,600	€ 14,000	€ 14,400	€ 14,800	€ 15,200	€ 15,600

Savings phase 2015–2025: maximum deductible special expenses (example: single people, West)
Tax year	2015	2016	2017	2018	2019	2020	2021	2022	2023	2024	from 2025
Assessment ceiling	€ 89,400	€ 91,800	€ 94,200	€ 96,000	€ 98,400	€ 101,400
Contribution rate	24.8%	24.8%	24.8%	24.7%	24.7%	24.7%
Maximum amount	€ 22,172	€ 22,766	€ 23,362	€ 23,712	€ 24,305	€ 25,046
proportion of	80%	82%	84%	86%	88%	90%	92%	94%	96%	98%	100%
amount	€ 17,738	€ 18,668	€ 19,624	€ 20,392	€ 21,388	€ 22,541

Savings phase 2015–2025: maximum contributions and deductible special expenses for employees (example: single people, West)
Tax year		2015	2016	2017	2018	2019	2020	2021	2022	2023	2024	from 2025
Cap amount (G) total pension expenses		€ 22,172	€ 22,766	€ 23,362	€ 23,712	€ 24,305	€ 25,046
Contribution assessment limit general RV		€ 72,600	€ 74,400	€ 76,200	€ 78,000	€ 80,400	€ 82,800
Contribution rate general RV		18.7%	18.7%	18.7%	18.6%	18.6%	18.6%
Maximum statutory RV	AG share (RVAG)	€ 6,788	€ 6,956	€ 7,125	€ 7,254	€ 7,477	€ 7,700
Maximum statutory RV	Employee share (RVAN)	€ 6,788	€ 6,956	€ 7,125	€ 7,254	€ 7,477	€ 7,700
Maximum basic pension contribution (BB = G - RVAG - RVAN)		€ 8,596	€ 8,853	€ 9,113	€ 9,204	€ 9,351	€ 9,646
Share of G		80%	82%	84%	86%	88%	90%	92%	94%	96%	98%	100%
Maximum pension expenses taken into account (MAV)		€ 17,738	€ 18,668	€ 19,624	€ 20,392	€ 21,388	€ 22,541
Maximum special expenses taken into account (MAV - RVAG)		€ 10,950	€ 11,712	€ 12,499	€ 13,038	€ 13,911	€ 14,841

Retirement phase

The tax treatment of the Rürup pension also corresponds to that of the statutory pension insurance during the retirement phase.

The monthly benefits from the Rürup pension are only subject to limited taxation until 2040. The tax-free portion is set at the beginning of the pension and is fixed as a fixed amount in euros for life (so-called taxation according to the cohort principle; each year forms a cohort ). The later the start of retirement, the higher the percentage of the pension that is taxable. Until 2020, the taxable percentage of initially 50% for the start of retirement in 2005 will increase by 2 percentage points annually, then by one percentage point until 2040. From 2040, the benefits for Rürup pensions paid out for the first time are permanently taxable. Pension increases occurring after the year in which the pension commenced are also taxed at 100% ( Section 22 No. 1 Table aa) EStG).

Payment phase: the taxable part in the first year of drawing the pension as well as the relevant percentage for calculating the tax-free portion of the pension, which is fixed in the long term, calculated from the annual amount of the following year
Start of retirement	2005	2006	2007	...	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	...	2038	2039	from 2040
Tax share	50%	52%	54%	...	62%	64%	66%	68%	70%	72%	74%	76%	78%	80%	81%	82%	...	98%	99%	100%

Example for a basic pension paid out for the first time in 2012: The taxable percentage for 2012 and the relevant percentage for calculating the tax-free portion is 64%. So if the full annual pension in 2013 amounts to e.g. E.g. € 10,000, € 6,400 of this is taxable. € 3,600 will be set as a tax-free amount for life from 2013.
Example for a basic pension paid out for the first time in 2013: The taxable percentage for 2013 and the relevant percentage for calculating the tax-free portion is 66%. So if the full annual pension in 2014 amounts to e.g. E.g. € 10,000, € 6,600 of this is taxable. From 2014, € 3,400 will be set as a tax-free amount for life.
Example of a later pension increase: If the pension increases by € 500 after the year in which you retire, for example, this additional € 500 is fully taxable.

Eligible forms of savings

Rürup or basic pensions are offered in specially designed tariffs as:

conventional pension insurance
unit-linked pension insurance
in the savings phase also as a fund savings plan

Death benefit

In the savings phase

A Rürup pension cannot be inherited; d. In other words, in the event of death, the assets are forfeited to the community of insured persons as with the statutory pension insurance.

The insurance industry offers various solutions if this loss is not desired:

The insurance contract can be designed with a survivor's pension of a predetermined amount in the event of death to the spouse or to the children entitled to child benefit.
Additional insurance - which is not subsidized for tax purposes - can be taken out for the "refund of contributions in the event of death before the start of retirement" (if necessary with full subscription rights).
The saved assets are used for a survivor's pension to the spouse or the children entitled to child benefit, if there are any. The extent to which such survivor benefits are also paid after the start of retirement is regulated differently.

In the retirement phase

If the insured person dies during the retirement phase, the paid-in capital, which has not yet been paid out arithmetically, is forfeited, unless a pension guarantee period has been agreed. If the saver is married, a survivor's pension can be agreed for the spouse.

There are different models for this, depending on the provider:

The survivor's pension is a certain percentage (e.g. 60%) of the main pension.
The survivor's pension can be structured by agreeing a pension guarantee period. If such a benefit is agreed for 10 years and the insured person dies after five years, the value of the pension to be paid in the first 10 years (here the pension for 5 years) is used to generate a lifelong pension for the widow / widower to finance (or a pension to the children).
Contracts are also offered in which not the pension for a certain reference period, but the pension capital at the beginning of the pension is the starting point for the survivor's pension. Already paid pensions are deducted from this capital and the remaining value is annuced.

The benefit for the children can only be paid for as long as the deceased would receive child benefit for the children, usually until the end of the vocational training, at most until the child is 25 years old.

Supplementary insurance

Additional insurance policies can be taken out for a Rürup pension, the contributions of which are tax-subsidized like those of the Rürup pension:

Survivors' insurance

A survivor's pension can be agreed for the spouse (or life partner) with whom the policyholder is in a valid marriage at the time of his death, as well as for children (condition: child benefit). The problem here is that in the event of divorce or the elimination of child benefit entitlement, benefits from supplementary insurance are not possible.

Occupational disability insurance

A pension or contribution assumption in the event of a disability or occupational disability can be taken over as part of a Rürup pension. The contribution for this supplementary insurance must be smaller than the contribution for the old-age provision so that the contract remains tax-subsidized. In the case of occupational disability insurance , the contribution to old-age provision also includes the contribution for the exemption from contributions (as opposed to the contribution for the pension payment in the event of disability). The advantage here is that the total premium is tax deductible. However, 50% of the premium must be allocated to the pension part. Separate occupational disability insurance can also be deducted as a special expense, but falls below the maximum amount of € 2,800 or € 1,900 for other pension expenses in accordance with Section 10 (1) No. 3a EStG. Since this maximum amount has usually already been used up by the health insurance contributions, the contributions to a separate occupational disability insurance are rarely tax-effective.

The combination of Rürup pension and occupational disability insurance also has disadvantages. So it is often not possible to provide the Rürup pension free of charge (termination not possible) without losing the disability insurance. Payment difficulties are treated differently among insurers. If the occupational disability insurance is coupled with the Rürup pension, there is a subsequent taxation of the occupational disability pension in the event of benefits if it serves as additional insurance in the Rürup model. In the case of unlinked occupational disability insurance in the private sector, only the income portion is taxed. This can lead to imputed uncertainty when concluding a contract and to additional tax burdens in the event of benefits - especially if additional high incomes, e.g. B. Investment income or rental income can be achieved. The taxable portion will be increased further in the long term. The taxable portion of the pension is to be increased to 100 percent by 2040 (cohort principle). When examining the advantages and disadvantages, the personal tax burden should always be included in the considerations.

Unisex tariffs from 2012

On March 1, 2011, the ECJ ruled on unisex tariffs : The sex of the policyholder may not be used as a tariff criterion, although different risks may exist.

rating

Target groups

The target group are self-employed who are exempt from social security, as they are denied provision through the company pension scheme and the Riester pension . Another target group are representatives of the liberal professions who are compulsory members of professional care (e.g. pharmacists, doctors, veterinarians, lawyers, tax consultants or architects), because they too cannot use Riester originally due to the lack of compulsory insurance for the GRV. Ultimately, the Rürup pension is also aimed at employees with high incomes that are subject to pension insurance: While contributions to traditional pension insurance or endowment insurance are no longer deductible as special expenses from the start of insurance in 2005, employees with Rürup contracts can use the special expenses maximum of € 22,172 per year and person . The deductible quota is reduced by the employee's share and the tax-free employer's share for the statutory pension insurance (GRV); In the case of civil servants, a fictitious reduction is made by the corresponding total contribution to the GRV, similar to the general manager of a corporation who finance a company pension .

advantages

As with other pension insurance contracts, a lifelong annuity is paid.
State subsidies ( tax advantages through deduction of special expenses), with contributions to statutory pension insurance or pension funds reducing the quota.

In the case of prolonged unemployment ( ALG II ), the saved capital is not taken into account when calculating assets .

Increases in value during the savings phase are not subject to taxation on the part of the policyholder.

An included occupational disability insurance can be deducted from tax if its share of the contribution does not exceed 50%. The contribution for an included component of the “exemption from contributions in the event of occupational disability” is considered to be the contribution to old-age provision.

Flexible savings: The costs can initially be kept low if the budget and business development only allow this to a limited extent. Deposits can be temporarily suspended .

Only those who are voluntarily insured in the health insurance of pensioners pay health and long-term care insurance contributions on the Rürup payout amount. All others receive the payment without any deductions in favor of the statutory health and long-term care insurance.

disadvantage

The Rürup pension offers no lump-sum option . Benefits are paid at the earliest after reaching the age of 62 (until 2012 at the earliest after reaching the age of 60). Only life annuities are provided.

Pension payments must be taxed depending on the start of the pension year (cohort principle).

Rürup contracts cannot be loaned, transferred or given away. A termination and the payment of a "surrender value" is also excluded, but an exemption from contributions is possible .

In the case of unmarried persons, the entire capital lapses in the event of death. Inheritance is not possible.

If the insured person dies before the start of retirement, the paid-in capital is forfeited. Depending on the provider, additional insurance as a survivor's pension or a contribution refund that is not subsidized for tax purposes can be agreed.

Even if the insured person dies after the start of retirement, the paid-in capital is forfeited. Rürup pensions do not have a pension guarantee period from all providers. If the saver is married, a survivor's pension can be agreed for the spouse.

While with Riester pensions it is always possible to transfer the savings credit minus a processing fee to another provider, only a few insurers offer the transfer of the capital to others. Usually there is only the option of making the contract free of charge. Other conditions may apply to the pension equalization within the framework of the divorce law.

A secured disability pension is taxable in the event of a benefit.

Rürup pension or statutory pension insurance

In contrast to the Rüruprente, the statutory pension insurance offers additional benefits. In contrast to statutory pension insurance, payments of the Rürup pension are exempt from deductions for social insurance - except for those who are voluntarily insured in the health insurance of pensioners.

Differences between statutory pension insurance and Rürup pension
property	Statutory pension insurance	Rürup pension
Guaranteed pension	The sum of the contributions paid in, spread over the average pension duration of currently 18 years (prohibition of expropriation).	Contributions paid minus fees. The guaranteed interest rate will be 0.90% from 2017. When choosing a unit-linked / capital market-related hedge, no guaranteed interest rate has to be granted. With unisex tariffs (since 2012) men and women receive the same payout, with gender-specific tariffs (before 2012) women receive less pensions due to a statistically higher life expectancy.
Return	Wage / salary development of the contributors.	Return on investment after fees.
Additional standard services	- Surviving dependents' pension as a widow's and orphan's pension - Provision in the event of disability or reduced earning capacity without a health examination - Allowance for child-raising periods - Professional rehabilitation

Pension Improvement Act

The Pension Improvement Act was passed in June 2013. There are now innovations for consumers who take out a Riester or Rürup pension. A uniform product information sheet is being introduced. Providers must now offer product information sheets on the Internet so that the customer has the opportunity to find out about the Rürup pension before signing a contract. In addition to the features of the Rürup pension, the expiry of the contract must also be recorded on the basis of customer information and the duration of the contract. The product information sheet will contain the following key figures for the Rürup pension:

Cost and return ratios
Effective costs
Division into opportunity-risk classes

The content and structure are specified by law. The product information sheet is intended to ensure comparability. In the event of a breach of information obligations or incorrect information, the insured person can terminate the contract and receive his principal back together with interest. This right exists for up to 2 years after the conclusion of the contract.

criticism

The objection raised against the Rürup principle is that a high proportion of the pension has to be taxed later, but that contributions are only partially tax-deductible.

If the insured does not want to make further contributions to the Rürup contract due to lower income, for example, he can only suspend the contract, but not terminate it by giving notice.

The effective expense ratio specified since 2013 for unit-linked products often does not include the real fund costs of the selected funds. Some providers calculate with flat rates. Trading and transaction costs, which are incurred at fund level and are not included in the total expense ratio , are also missing in the calculations .

literature

Oliver Heuchert: ZDF-WISO state-subsidized old-age provision: [Riester pension, company pension, Rürup pension] , Frankfurt am Main; New York: Campus-Verlag, 2006, ISBN 978-3-593-38145-9 .
Bert Rürup , Kurt F. Viermetz : Wealth formation and old-age provision in Germany and the USA , GDA, Society for Marketing and Service of German Employers, Berlin 2002, ISBN 3-936074-18-6 .
Wolfgang Wehowsky, Harald Rihm: The practice of statutory pensions: the expert advice on all pension issues and old-age provision (including Riester pension and Rürup pension) , 3rd, updated edition, Expert-Verlag, Renningen 2012, ISBN 978-3- 8169-3156-0 .

Web links

Rürup calculator , service of the Deutsche Rentenversicherung and the Deutsche Rentenversicherung Knappschaft-Bahn-See

Individual evidence

↑ Oliver Heuchert: WISO: Security with the new pension taxation.
^ BZSt portal: List of all certificates issued (old-age provision and basic pension contracts). Retrieved November 28, 2017 .
↑ Helmut Schirmer General Law Insurance Law
↑ Section 10 (3) EStG
^ Rainer Ilg, The private and company pension scheme - Riester, Rürup
↑ Take disability insurance into account in your tax return . cosmosdirekt.de. Retrieved February 27, 2019.
↑ Taxation of retirement income . bundesfinanzministerium.de. Retrieved February 27, 2019.
↑ BaFin on the unisex judgment of the ECJ. Retrieved November 28, 2017 .
^ Klaus Jaeger, Institute for Economic Theory of the Free University of Berlin
↑ Consumer Center Hamburg: Rürup contracts: cannot be terminated, commissions eat up a large part of the saved assets . [1] Süddeutsche Zeitung online October 18, 2012

[heuchert-1] Oliver Heuchert: WISO: Security with the new pension taxation.

[2] BZSt portal: List of all certificates issued (old-age provision and basic pension contracts). Retrieved November 28, 2017 .

[3] Helmut Schirmer General Law Insurance Law

[4] Section 10 (3) EStG

[5] Rainer Ilg, The private and company pension scheme - Riester, Rürup

[6] Take disability insurance into account in your tax return . cosmosdirekt.de. Retrieved February 27, 2019.

[7] Taxation of retirement income . bundesfinanzministerium.de. Retrieved February 27, 2019.

[8] BaFin on the unisex judgment of the ECJ. Retrieved November 28, 2017 .

[9] Klaus Jaeger, Institute for Economic Theory of the Free University of Berlin

[10] Consumer Center Hamburg: Rürup contracts: cannot be terminated, commissions eat up a large part of the saved assets . [1] Süddeutsche Zeitung online October 18, 2012