It is a lucky day for many older people: they have worked hard for decades and paid contributions to the pension fund. And now it’s finally in her mailbox, the “pension notice” from her pension fund. But instead of joy, reading the document often leads to disillusionment.
Because it is only at this moment, much too late, that many people realize that the “payment amount” of their pension is significantly lower than they thought, because retirees also have to pay contributions to health insurance and nursing care insurance. And, oh yes, on page 5 of the decision is the question: “Do I have to pay tax on my pension?” Answer: “Part of your pension is part of your taxable income. We cannot say whether you actually have to pay taxes on it. Only your tax office can check that.” end of the announcement.
Yes, it’s true: Even in the “pension information”, which the pension fund sends millions of times to the contributors every year, it says in the first paragraph “that the pension also includes health and long-term care insurance contributions and, if applicable, taxes”. But many only pay attention to the bold framed numbers and overlook important text passages. They already think they are more prosperous than they are in the end. Is it everyone’s fault?
This leads to the fundamental question: is the state in Germany actually doing enough to inform citizens early on about their financial security in old age, because this is the only way they can make adequate provisions? The answer is: no.
It has just become known that from July tens of thousands of retirees will only have to pay taxes because their pensions will rise. And that six million of the 21 million pensioners are already paying taxes, a consequence of the change in pension taxation in 2005. But still hardly anyone understands what that means.
The federal government must finally introduce the digital pension overview
It is high time that the federal government finally makes an innovation that has been discussed since the 2000s a reality: it must provide a “digital pension overview” that gives every citizen – and not just every pensioner – a comprehensive overview of their statutory, operational and pension obligations private pension schemes exist. Other countries have long been further along, especially Denmark: the online platform has been there since 1999 www.pensionsinfo.dk, which informs everyone about all areas of old-age provision. The Dutch also have something similar, similar to Sweden and Belgium. But Germany?
It was not until 2018 that the federal government under Chancellor Angela Merkel seriously tackled the “Digital Pension Overview” project. The law came into effect in February last year. The goal is: Under the umbrella of the German Pension Insurance Association, a digital platform is to be created on which citizens can get an up-to-date and user-friendly overview of their old-age provision. This should also ensure that everyone takes care of their retirement provision at an early stage.
At the end of the year, according to the latest information, the digital pension overview will finally go into trial operation, initially with voluntarily affiliated pension institutions. “Regular operation” is planned for a year later. Hopefully you will find understandable information on pension taxation there.
However, there is already a ray of hope for retirees who find their tax returns difficult: the tax authorities have recently started offering the software “simple magpie” especially for retirees and retirees. You no longer have to search for the data on pensions and health and long-term care insurance, they are already entered. Because they are available to the tax authorities. In fact, it’s been like this since 2009.