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Riester pension:

Secure state subsidies and save taxes on your pension

The statutory pension alone will no longer be sufficient in old age. Close any gaps in your pension provision early with an additional pension. With the state-funded Riester pension, you receive a guaranteed lifelong additional pension when you retire.

The most important things about the Riester pension in brief:

 

  • The Riester pension helps employees and civil servants, but also their spouses, to build up private retirement provision in the form of an additional pension. There are different product variants of the Riester pension for retirement provision to choose from: the Riester pension insurance (as a classic pension insurance with surplus participation or as a fund-linked solution), Riester fund savings plans and residential Riester.

  • The state supports you with allowances of 175 euros as a basic allowance for adults and with up to 300 euros per child for the Riester pension as retirement provision. For young professionals up to the age of 25, there is an additional pension bonus of 200 euros.

  • You can deduct pension contributions from your taxes up to an amount of 2,100 euros per year. Please note that you will have to pay tax on the subsequent payment of the pension.

Your advantages of the Riester pension as your retirement

 

  • Provision Attractive state allowances and tax advantages for your own retirement provision

  • Free of charge when receiving citizen's money

  • Up to 30 percent of the pension can be paid out once at the start of retirement

  • Also as a residential Riester

What is the Riester pension?

 

In 2002, the federal government reduced the level of the statutory pension in order to keep contributions stable. At the same time, private pension provision became more important. The Riester pension was decided so that more people could save additionally for old age. Financial pension provision, with government subsidies on contributions and tax advantages, ensures that it is even more worthwhile to become active yourself.

Riester pension: This is how the additional pension works and this support is available

 

Basically, “Riestern” works like any other pension insurance: you pay monthly contributions into an insurance or savings plan in order to receive an additional pension in old age. The highlight of Riester is the state subsidies (funding). They make it possible to build up relatively high financial provisions with small contributions.

Child allowance, basic allowance, bonus: The state provides these subsidies

 

What subsidies does the state give for your pension? Riester savers benefit from various allowances: Basic allowance: 175 euros per year is available to every saver. Child allowance: The child allowance is only available to one parent; you have to decide who should receive the allowance. Career starter bonus: Anyone who concludes their Riester contract before their 25th birthday will receive a one-off extra 200 euros as an allowance.

Riester funding: State funding for the Riester pension in detail This is what you get annually:

Good to know: An interesting alternative for high earners without children is the Rürup pension.

How high is the minimum personal contribution to the Riester pension?

 

You will only receive the full supplement to the Riester pension (retirement provision) if you save for the pension yourself. Therefore, the law requires that you pay at least 4 percent of your pensionable income per year into the contract. However, the state increases the contributions. It is sufficient if the personal contribution plus the allowances make up the required minimum personal amount. If you save less, you will only receive the allowances proportionately.

 

The Riester minimum contribution is to be calculated as follows: 4 percent of gross income minus allowances results in the minimum amount to be paid. Depending on how many children you have, this results in the following amounts, for example:

Gross income

subject to pension insurance

Minimum

contribution

4 percent

Number of children entitled to

child benefit (born in 2008 or later)

Number of children entitled to child benefit (born in 2008 or later)

Minimum payment

to be made

36.000€

1.440€

0

175€

1.265€

36.000€

1.440€

1

175€

1.265€

36.000€

1.440€

2

775€

665€

36.000€

1.440€

3

1.075€

365€

For whom is the Riester pension worthwhile as a retirement provision?

 

This form of pension provision is only worthwhile if you are eligible. These are essentially the following groups:

 

  • employed employees and trainees

  • Self-employed persons subject to statutory pension insurance

  • People insured in the artists' social insurance fund

  • Participants in the Federal Voluntary Service

  • Students with mini-jobs subject to pension insurance

  • Officials, soldiers and judges

  • Recipients of unemployment benefit or citizen's benefit as well as sick benefit recipients

  • people with reduced earning capacity, those unable to work and those unable to work

“Riestern” via your spouse

 

In addition to those directly eligible, their spouses have access to the Riester pension. Of course, this regulation also applies to same-sex couples in registered civil partnerships or in marriage for everyone. The partner who is not entitled to the allowance must pay a basic contribution of 60 euros annually into the pension in order to receive the allowance.

Riester pension: Who benefits most from this form of retirement provision?

 

Thanks to the high allowances for children, the “Riestern” is particularly recommended for families and single parents. You have the opportunity to save a decent amount for your pension with small contributions. Single high earners also benefit from the Riester pension as a retirement provision. You have the option of deducting the maximum contribution of 2,100 euros as a tax deduction.

State the Riester pension in your tax return

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You claim the contributions to the Riester pension as special expenses at the tax office. The entry belongs in Appendix AV. However, you will not receive the full tax advantage for your pension because the tax authorities reduce the savings by the allowances you have already received.

Riester pension: This is how the payment of retirement provision works

 

When you save for your Riester pension, you benefit from allowances and tax advantages. If the pension is paid out later, it must be taxed in full - but then only at the total tax rate applicable when the pension was withdrawn.

Would you like to find out more about the Riester pension or retirement planning in general?

 

Arrange an appointment to talk. An experienced MLP consultant will take time for you and work with you to determine whether the Riester pension or a private pension insurance, the basic pension or a company pension plan is recommended for you and your family.

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