How do I find the best pension plan for me? We spoke to lawyer and pension consultant Peter Knöppel and provide you with the most important details about state and private pensions:
My state pension will be low. What if I can't make ends meet?
"If the pension is not enough to live on, the insured person can apply for basic income support or earn additional income alongside their pension. The solidarity pension is currently being discussed as a basic pension. If it is introduced, it is possible that the woman will receive a top-up above the local basic income support rate, taking into account periods spent bringing up children and caring for close relatives, in order to avoid poverty in old age. But nothing has been decided yet."
What about additional income, is there a maximum limit?
"The new flexi-pension law has been in force since July 1, 2017. It states: If I have additional earnings alongside my state pension, a maximum annual income of 6,300 euros is not deducted from the annual pension for an early retirement pension. What you earn over and above this is taken into account according to special regulations (40 percent and further with full crediting). Once they reach the regular age limit, pensioners can earn unlimited additional income."
Is it worth taking out a private pension over the age of 40?
"It is very difficult to give a general answer. It is true that Deutsche Rentenversicherung is forecasting 'secure returns' of two to three percent for 2030. The expected returns on private pension investments are currently very poor. Interest rates and guaranteed interest rates for fixed investments are plummeting. This is also having an impact on company pension schemes. As no one knows what the German pension scheme will look like in the future, the rule remains: invest money in different pots. I recommend calculating as precisely as possible and exploring the best offers on the market, depending on the type of investment. That's why a private pension can actually make sense from a tax perspective."
I work part-time because I care for my mother. What effect does that have?
"There have been new regulations since 2017 with the flexi-pension. Basically, caring for my mother always has a positive effect on my own pension account if my mother herself has care grade 2 (new since 2017). From then on, pension points are credited to the carer's account with Deutsche Rentenversicherung. The amount of earnings points depends on the care degree. In addition, care time of at least ten hours per week (on two days) with own working hours of no more than 30 hours must be spent caring for the mother. The earnings points also depend on whether the care is provided in the West or East. If you are caring for your mother, you should definitely apply to your mother's health care insurance fund for recognition of care periods for your pension. An expert will then be sent to take a close look at everything. Caring can have a really positive effect on your later pension."
How do the periods I spent caring for my children affect my pension?
"Women who gave birth to children after 1992 and raised them for three years are credited with three years of child-raising: 0.0833 earnings points per month. That makes a total of three earnings points for three years. This results in a monthly pension of 93.09 euros. Be careful: For one earnings point, I have to earn an annual income of 37,873 in the German pension insurance scheme in 2018. Women in the East have to work slightly less due to the different pension calculation. Since July 1, 2014, women who gave birth to children before 1992 and mainly raised them have been credited with two years of child-raising periods. This means that having and raising children does not necessarily have a negative impact on a woman's employment history."
We want to spend our retirement abroad. What do we need to consider?
"Firstly: send a life notification to the German Pension Insurance every year, otherwise pension payments may be stopped. Secondly: statutory health insurance cover for pensioners abroad. In other European countries, protection is generally guaranteed by the health insurance for pensioners. This is a result of European law and various social security agreements. For other stays abroad, you may lose your health insurance status after a certain period of time and have to take out private insurance. It is also important to clarify what services the local hospitals and care facilities provide and what is recognized by German health insurance before a longer or indefinite stay abroad."
You should definitely pay attention to this
➜ Pension application
The application should be submitted to the pension insurance fund three months before the planned date to ensure that your first payment arrives on time. However, you can wait up to three months after you are entitled to a pension to submit your application - and still receive your pension retroactively. If you wait longer, you will only receive money from the month of application.
➜ S eek help
As pension applications are very complicated, you should seek help to complete them - for example from Deutsche Rentenversicherung or a licensed pension consultant.
➜ O bjection
If the insured person has doubts about the correctness of the pension calculation, they can lodge an objection within four weeks.
The most important addresses and telephone numbers
- Find out everything you need to know about planning, applying and more. www.rentenbescheid24.de
- Comprehensible information for people of all ages. www.deutsche-renten.info
- Everything you need to know about all forms of pension provision. www.rententips.de
- Pension information clearly explained and itemized. www.einfach-rente.de
- Free service hotline of the German Pension Insurance. Tel.: 0800/100048070
- Citizens' hotline of the Federal Ministry of Labor and Social Affairs. Tel.: 030/221911001
- Free service hotline of the Internet portal www.finanzen.de. Tel.: 0800/3003009
- verdi provides its members with legal protection in pension matters (among others). Tel.: 0800/8373433
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