Voluntary pension contributions
This is how you top up your statutory pension – and you can retire earlier
It can be worthwhile to pay into the statutory pension fund voluntarily
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When you are at school, training or studying, you usually do not pay into the statutory pension. You can pay these missing contributions if you are under 45 years of age. It can be worthwhile – especially if you want to retire earlier.
The statutory pension is the cornerstone of retirement provision in Germany. The monthly contributions, which usually go directly from the gross wage to the pension fund, are intended to provide security for old age. But the system punishes the times in life when there was no payment, which reduces the pension. Raising children or caring for relatives reduce the pension. But training periods such as studying also tear gaps in your own pension entitlement.
If you are under 45 years of age, you can change this and pay into the statutory pension voluntarily. It’s worth it – especially if you want to retire earlier. The periods between the age of 16 and 17 are taken into account if a school was attended during this time or if an apprenticeship from the 17th birthday lasted longer than eight years.
But not all training options make it possible to voluntarily pay into the fund. “Additional payments for training in secondary schools, technical colleges, universities and for vocational training measures are possible,” say the experts from “Finanztest”. There are reasons for this: Credit periods are only allowed that have not already been otherwise documented under pension law. Training courses that lasted up to eight years from the age of 17 are counted without contributions. The time as an employed trainee is already included in the pension bill.
When is the additional payment for the pension worthwhile?
Increasing the statutory pension is not worthwhile for everyone. Most important point: Your own life expectancy should be high. The longer you live, the higher the return on your pension. Anyone who has a serious illness or has a family history of a disease that can affect life expectancy should consider this step carefully.
In addition, there are other points for which it might be worth paying the contributions:
- You want to retire earlier. But only very few make the necessary 35 contribution years, which are at least necessary to retire at the age of 63 and with deductions. Those who want to retire without a deduction need a minimum of 45 years of insurance. But be careful: the back payments are only included here if you have paid contributions to the pension fund with compulsory insurance for at least 18 years, for example through a job subject to social insurance, through bringing up children or caring for relatives.
- You rely on the tax breaks. The subsequent contributions to the pension fund are tax-deductible to a certain extent.
The additional payments are not freely selectable: in 2021 at least 83.70 euros must be paid for each month. However, this would hardly be noticeable later, according to the financial testers. The pension would only increase by 0.37 euros. However: If there are several years that may be paid in arrears, and if higher amounts are paid, the possible arrears sum increases to several 10,000 euros. The motive for making additional payments must also be taken into account here: If it is only a matter of increasing the minimum insurance period, the amounts due for each month should remain low. However, if the pension is to be increased through the additional payment, significantly higher amounts must be paid. The financial testers do the math: Anyone who pays 12,000 euros once increases their pension by 1.5531 earnings points or by 53.10 euros per month.
“Finanztest” provides an example: A 44-year-old studied for a long time and only graduated at the age of 28. Then he worked independently until he was 34 years old without paying into the statutory pension. Then he took a well-paid, social security job. His pension is expected to be 1,540 euros. That is not enough for the man. For school years between the ages of 16 and 17 and for the 36 months of study from the age of 25, a total of 48 months come together, for which the man can pay a maximum of 63,389 euros. That would increase his pension by 270 euros a month.
The sum is high, but the man has another advantage: He can deduct it for tax purposes. If he splits the payment over five years, he could get a total of 22,853 euros back from the tax office. The financial testers calculate that the pension increase would only cost him around 40,500 euros.
You can get the entire guide for a fee www.test.de.
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