Riester Rente vs. other pension schemes

228 posts in this topic

On 10-2-2007 23:36:38, Hamburg Koala said:

There are much better ways to invest the same money in the meantime where you get to keep what your money's "earned"...

Hello,

 

Can you give example(s)? Thank you in advance

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On 13/08/2017, 11:18:40, PPR said:

Hello,

 

Can you give example(s)? Thank you in advance

 

the contribution you are quoting is more than 10 years (!) old. How do you expect a reply on that, @PPR ? And are you still in Belgium or now in Germany?

 

Cheerio

 

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1 hour ago, Starshollow said:

 

the contribution you are quoting is more than 10 years (!) old. How do you expect a reply on that, @PPR ? And are you still in Belgium or now in Germany?

 

Cheerio

 

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.

 

I didn't notice the contribution was that old. In the meantime I already learned a lot from this forum, but if not from the original poster, anyone's insightful answer is welcomed (of course in today's environment).

 

I move to Germany Jan 2018. Main attention points now are those I need to take care of before relocation. (example stock selling to avoid capital gain tax). Still lots of reading to do on all fronts.

 

 

 

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Hi,
 
Thank you all first for the very detailed explanation about the German pension products on this forum.
 
Some questions regarding the points addressed:
 
1.Benefits 
Regarding the benefits is somewhere stated:
- Good thing: you get a direct subsidy for yourself and for every kid, money cash from the governement.
-  Good thing 2. you can write of your payments against your income taxes” 
 
I understand the first point about the yearly subsidy up to EUR 2.100. However I have not seen explained your other point. What is meant by this point? Is meant that the contributions are tax deductible (I’m pretty sure this is not the case)? Or how should I interpret this?
 
2. Tax
How are the final payouts from the Riesterplan taxed? Do you have to pay for example income tax over the payouts? And, does this also apply when you live somewhere else in EU?
 
3. Examples ungezillmerte contracts
Which providers of pension plans offer “good” fair Riester plan contracts, i..e ungezillmerte Verträge?
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Good evening, Rovaaa!  You are new here and why not?

I don´t know if you intend to stay in Germany long term but even if...laws change and I bet  nobody knows about the next 30-40 years so it´s all speculative. Ok, respect for your questions but in the NOW: are you ok insured? eg personal liability insurance/private Haftpflicht? Health insurance? Income protection etc? Anything else is speculation. And that includes Riester...

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I read this thread quite a bit, but the first posts are from 2005 and I'm not sure if some of the information is outdated.

A post from 2009 says that if you give up your residence in Germany, you will have to pay the subsidies and tax breaks back. It also says that the European Commission has sued the German government with regards to this rule at the European court. My financial adviser says that I do not have to pay anything back if I leave Germany, unless I stop the savings plan. I can continue with the plan or defer it by any number of years and not loose the subsidies. Does this mean that the law has changed due to the action taken by the European Commission?

I've been offered a plan (DWS Top Dividende) that has "zillmerung", i.e. the fees are paid during the first five years. He says that it's not possible to spread the fees over the whole duration. Is this true? An earlier post says that there's a plan called DWS Top Rente that is without "zillmerung", but my financial adviser says that it's an investment plan meaning that you won't get the government subsidies (unless you take an additional and expensive pension insurance on top of that). Has anyone succeeded getting a pension savings plan lately that doesn't have "zillmerung"? Do you suggest taking such a plan, if it's not possible to find one without "zillmerung"? (I also asked about the possibility of having a smaller monthly payment and paying a larger lump sum each year to save on the upfront fees, but he said it doesn't help anything.)

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Hi Sepisto, 

 

of course you can have a DWS Riester plan without up-front costs (Zillmerung) .

I do have one without this "bad" advise.

All possibilities that you quote are ususal and common among well informed customers.

 

You are welcome to contact me if you need more information. 

 

 

Regards from Dan

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From what I can see the German state pension it not worthwhile, in terms of what is paid in vs what is possibly paid out in N years.

I like the freedom of the SIPP pension system in the UK. No forced annuity at some terriable interest rate.

As a UK citizen, I am considering now making up past, missed, contributions to the UK state pension, as I have not paid my full 35 years quota yet. Whilst not amazing, it's at least some state pension provision for a freelancer. I was wondering if such contributions are deductable in some way, given I live and pay taxes in Germany and not in the UK.

I guess come October 31st, things might even be different, as the UK may no longer be an EU based state pension, depending on how things end up playing out.

 

I am undecided if I should retire in Germany (good health care) or move to somewhere like Spain for the better weather. Currently it looks like I will retire here in Germany, but some good few years yet to go before that comes about.

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35 minutes ago, scook17 said:

From what I can see the German state pension it not worthwhile, in terms of what is paid in vs what is possibly paid out in N years.

Depends on how old you will become  ?. 

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On 9/14/2019, 6:52:37, LukeSkywalker said:

Depends on how old you will become  ?. 

 

How old does one have to live, in order to get back what was paid in?

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Only reincarnation helps, Sepisto! So start believing????

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Having read these threads with great interest I still have a couple of queries - hopefully someone can help:

 

1. Are "foster children" count towards the state subsidies?

 

2. Why might one even consider taking a Riester with "zillmerung"?  I have read about the negatives (up-front fees etc.) but not about any benefits which outweigh those.  If I plan to eventually retire in Germany what advantages would a "mit Zillmerung" give me over one without?

 

3. To get maximum benefits from Riester I need to pay in 4% of my income, but for me that tends to change a bit year by year.  I could set up a plan with 4% of my current income, and then, during the year, pay extra to bring it up to 4% if my salary had gone up. But I need to be sure that it is clear that I have paid in 4%. I suppose my question is at what point in the year is it noted if I have paid in 4%?

 

Thanks in advance.

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Add some kind of disclaimer and/or what you do professionally, danny! Website? Are you qualified and registered?

I am not necessarily doubtful of your knowledge but kosher is kosher .

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7 hours ago, Laurieston said:

Having read these threads with great interest I still have a couple of queries - hopefully someone can help:

 

1. Are "foster children" count towards the state subsidies?

 

2. Why might one even consider taking a Riester with "zillmerung"?  I have read about the negatives (up-front fees etc.) but not about any benefits which outweigh those.  If I plan to eventually retire in Germany what advantages would a "mit Zillmerung" give me over one without?

 

3. To get maximum benefits from Riester I need to pay in 4% of my income, but for me that tends to change a bit year by year.  I could set up a plan with 4% of my current income, and then, during the year, pay extra to bring it up to 4% if my salary had gone up. But I need to be sure that it is clear that I have paid in 4%. I suppose my question is at what point in the year is it noted if I have paid in 4%?

 

Thanks in advance.

Good evening, Laurieston!

People bitch and quarrrel about percentages here and there. Fair enough.

What counts first, IMHO, is: what happens if you cannot continue to pay into this stuff because you cannot work anymore because of a serious illness or accident? Wat nu?

Ok, priorities..a decent health insurance AND definitely  personal liability insurance in Germany ( private Haftpflichtversicherung ) and then - first..unless  the boss is paying into something for you re pension -  income protection of some kind.

THEN pension.

OK, if you have the traditional rich Uncle in America...life can change.

But you never know.

If you can afford everything anyway..good for you. Life is risky.

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15 hours ago, john g. said:

What counts first, IMHO, is: what happens if you cannot continue to pay into this stuff because you cannot work anymore because of a serious illness or accident? Wat nu?

Ok, priorities..a decent health insurance AND definitely  personal liability insurance in Germany ( private Haftpflichtversicherung ) and then - first..unless  the boss is paying into something for you re pension -  income protection of some kind.

THEN pension.

 

Perhaps you can share some illustrations for freelancers. Would be useful to see. Also if this is claimable as a tax cost, or are there limits you hit.

 

1. Freelancer aged 50 as of today. In good health. Non smoker. What is the typical cost of such serious illness cover?

Is this an annual cost, which sky rockets once someone becomes ill? Who pays the costs if someone no longer can work? What is defined as 'can no longer can work'?

Are pre-existing conditions excluded, and you need medical checks, or is it an insure everyone at the same rate system?

Who underwrites this? What happens to the policy when AIG (or this insurer) goes under in the next big crash?

 

2. Income protection - Sickness/Unemployment. Sounds nice. Does it cover freelance people who natrually move from one contract to another?

How long do you need to be sick? A friend of mine went through trying to claim sickness with AOK and she had to wait 6 weeks before getting some percentage of her salary, claimed for 2 weeks, and needed to return to work.

 

I am not trying to pick holes, but I am curious how it works, what it costs, and how it works for taxes etc.

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Happy birthday??

I will try to find time today to make some comments!

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I don´t have much time right now, scook17 but some general points:

1. Cannot say because it depends on health, profession, age, required insurance cover etc and this is very personal and not the same for everyone and it depends on the model you choose. Not an annual cost usually- mostly monthly.

Defining " cannot work ": doctors from your side and the insurance company´s side. This again depends on the insurance model.

Prices do NOT go up if you become ill and get insurance payout. Actually, payments can be frozen if you become unable to work.

 

Pre-existing conditions: depends- some might make you uninsurable or at a premium hike.Individual assessment by insurance companies.

 

Who underwrites? Depends on the insurance company - each has their own underwriter.All companies pay into a Sicherungsfonds to protect a client in case of insolvency - that is one reason to choose a company with excellent financial ratings and not some start up outfit.

 

2. Yes

When do they pay? Depends on the model!  To simplify it: there is, for example, the classical Berufsunfähigkeitsversicherung,(occupational disability insurance ) which generally pays a monthly pension if docs can show you are at least 50.1 per cent unable to carry on your current profession for mental or physical reasons for at least the next 6 months. There are important clauses re if you need to change professions completely and/or downsize your work hours etc.

 

Another model is (and useful for self-employed with overheads to cover ): you are diagnosed with a serious illness from a list and once you are diagnosed and specialist doc exchanges etc are finished, you can get a tax-free payout as a lump sum. You don´t with this even have to become berufsunfähig.

 

Other models: for some people, maybe, there are certain physical capacities they may wish to insure eg. seeing, walking, use of hands, hearing etc. Monthly pension.

 

Tax deductibility: with the classical Berufsunfähigkeitsversicherung: as a self-employed person, you can generally claim as Sonderausgaben in your tax statement, which reduces your taxable income --but that doesn´t mean you get the money back! It just reduces your taxable income.

No cap fits all sizes..it is complex.

Anyway, off to hospital myself tomorrow morning to sort something out!

Again, many Happy Returns!!!

 

And a final thought:

https://www.gunnpartner.com/articles/Income-Care

https://www.gunnpartner.com/articles/Occupational-Disability-Insurance

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Hello wise people, have Riester questions!

First, my status. I'm employed, married, and have one child. Spouse is registered as a freelancer. I have

1. statutory pension contribution

2. bAV (I think) of 260 EUR (of which 90 is co-payment from my employer). I opted for this only from August.

 

Now to the questions:

1. Will I get the subsidies if I start a riester plan now?

2. If yes, how much should I pay this year so as to maximize benefits? (Assuming I can make a lump sum payment)

3. https://www.fairr.de/produkte/fairriester/ how does this look? Upside: invests in ETFs, commission is spread over the lifetime. Downside: 0.6% fee p.a.

4. If both me and my spouse pass away at , say 60y, will the funds transfer to my child? (Who will be an adult by then)

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On 21/09/2015, 11:31:42, Starshollow said:

when you refer to "tax exemption" according to § 3 Nr. 63 EKSt-Gesetz you do refer to "betriebliche Altersvorsorge" or "bAV", i.e. company pension schemes.

These have the following advantages over the RIESTER plans, which is why I would always recommend to do a "Direktversicherung" or "Pensionskasse" instead of a RIESTER, given the choice:

 

1. with a "bAV" you are shaving off money from your gross salary which goes directly into the pension plan. That way you have an immideate tax savings effect. And you can put up to 4704 EUR per year from your gross salary with full tax savings (and if your gross salary is below 72600 EUR per year also social welfare contribution savings) instead of just 2100 with a RIESTER plan. And with the latter you invest from your net-income first and then get tax reduction or reimbursment when you declare your taxes later.

2. With a RIESTER you can only cash in 30% of the final total, the rest has to come with an annuity for life/pension pay out for life. if you cash in 100%, you'll lose all the tax benefits and direct subsidies (ZUlagen) you received in the past. With a "bAV", however, you do have the right to get a 100%-payout when reaching pension age. That gives you much more flexiblity in my professional opinion.

 

Therefore I would rather recommend setting up a bAV-Direktversicherung than a RIESTER. Or, said differently: you can do both of course, but first the bAV and later the RIESTER.

 

Cheerio

 

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.

^ found this; i suppose i can have a riester plan in addition to my bAV. Considering the benefits, it would make sense for all employees with children to take a riester plan, right? I wonder why i never heard about it the 3 years I have been here.

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