German Pension Plans and UK National Insurance Contributions

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Hi - I'm looking for some pension advice.

I've lived and worked in Germany for about 10 years and as well as paying into the German state scheme during that time I have also picked up along the way both a "Direktversicherung" and an "Unterstützungskasse" pension which is deducted tax free from my salary and a Riester-rente contract (for myself and my wife) from the bank which I believe I get the tax back on payments from my tax return.  These all seemed to be relatively good deals but please let me know if otherwise.

 

My wife has recently started working again (also British), but it doesn't seem her company have an arrangement with a pension company for the tax-free schemes I have from my salary so I am wondering if there is something similar that can be paid - and then can the tax be claimed back at the end of the year?  Is there a maximum limit?  Any recommendations?

 

Secondly I have been paying voluntary class 2 NICs for the last 10 years, it's only a few pounds a week - Total I probably have about 25 years total now.  I have tried to discuss with the DWP and also looked online and I can't get a straight answer as to whether it is worth continuing payment.  Maybe is would help towards some UK state pension, but I don't want it to interfere with claiming the German state pension in my later years (presuming I'll be back in the UK,but you never know....) - naturally I've made quite some significant payments so far into the German scheme and intend to continue for some years to come.

 

thanks in advance!!

 

 

 

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4 minutes ago, PCarnold said:

Secondly I have been paying voluntary class 2 NICs for the last 10 years, it's only a few pounds a week - Total I probably have about 25 years total now.  I have tried to discuss with the DWP and also looked online and I can't get a straight answer as to whether it is worth continuing payment. 

 

 

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42 minutes ago, PCarnold said:

Hi - I'm looking for some pension advice.

I've lived and worked in Germany for about 10 years and as well as paying into the German state scheme during that time I have also picked up along the way both a "Direktversicherung" and an "Unterstützungskasse" pension which is deducted tax free from my salary and a Riester-rente contract (for myself and my wife) from the bank which I believe I get the tax back on payments from my tax return.  These all seemed to be relatively good deals but please let me know if otherwise.

1

 

You have certainly used the main tax-subsidized options that are open to you as an employee here in Germany. So far, so good.

How good a deal that is, in the end, depends on the cost-structure of these plans.  Unfortunately Germany is still a heavily commisson-based market for pension insurance sales and upfront commissions reduce the amount of your money being invested seriously in the first 5 years.  But if you had no choice for the Direktversicherung and Unterstützungskasse due to your employer limiting the options to some plans he has pre-selected, there is little gained by discussing this. You just need to be aware of that. 
With RIESTER plans, especially when sold by a bank, I would also fear that you got something with heavy upfront deductions for commissions. Depending on how long you have been paying into these plans (i.e. how much in costs you have already suffered and paid for) it may still make sense to switch...or not.  You might want to have an independent advisor look into this for you.

 

42 minutes ago, PCarnold said:

My wife has recently started working again (also British), but it doesn't seem her company have an arrangement with a pension company for the tax-free schemes I have from my salary so I am wondering if there is something similar that can be paid - and then can the tax be claimed back at the end of the year?  Is there a maximum limit?  Any recommendations?

 

 

As an employee she has a right to defer some of her gross salary into a company pension scheme like the Direktversicherung. Thus - unless the employer offers something himself - she can look for a suitable plan, get advice and the plan set-up and the employer has to co-sign and take care of the deductions from the gross salary and the payment to the plan even if the employer does not contribute a dime. Which will change in 1-2 years anyway, when employers HAVE to co-contribute at least 15% of the defered gross salary the employee choses to pay into his company pension scheme.  Again, the use of a truly independent financial advisor would be highly recommendable for your wife (and you) to this regards.

 

Cheerio

 

 

 

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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Hi, thanks for all the info.

we’ll make some enquiries with my wife’s employer and get back if needed for some advice.

I also questioned my schemes - seems  the Direktversicherung can only be taken when 67 and is limited to 248Euro pm but can be transfered between employers.  The Unterstützungskasse can’t be transfered but can be taken early if you retire early from that specific employer.  You are right on the Riester - I assumed it was vey commission based by the way the bank went out his way to “help-us” but the returns seemed a lot better than anything else on offer at the time.

 

On the UK NICs good to learn that the ability to pay class 2s will stop in April 2019 to be replaced by class 3s, so may be good to get as many years as possible in now.

 

Where I get stuck and it seems other members do to is understanding the sums.

I will probably end up with about 25 of 35 UK contributions worth about 500GBP pm pension and about 25 of 45 German contributions worth about 1500Euros pm.  Now ignoring Brexit and all that for now, I doubt with the current rules I will get these two sums cummulatively, but reading all the blurb and online info. I guess the 25 year German pot takes precedence and then I may get 10years worth of UK pension as that would make it up to the 35 years where the UK maxes out.

Which would then mean it is not worth paying any more into the uk scheme as the German scheme cancels it out.

Or am I completely mistaken? Or is there no simple answer?

 

Apologies for the questions, just seems the right time in life to work out what we’ve actually got.  Thanks

 

 

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seems  the Direktversicherung can only be taken when 67 and is limited to 248Euro pm but can be transfered between employers

 

both info should not be entirely accurate from where I stand as a professional advisor:

 

a) all Direktversicherung schemes I know allow you to start drawing your pension when you turn 63, some of the older ones even when you turn 62. It is just that obviously the guaranteed pension per month will be lower if you start earlier.

b ) since January of this year you can defer up to 520 EUR per month from your gross salary into the Direktversicherung. While some older schemes may not allow an increase (because they simply can't afford to give you the same old guarantees from the past for new additional money due to the changes in the re-investment market), you can of course add in such a case a second plan to enjoy the full tax benefits still

 

Cheerio

 

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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Thanks again for all the advice!  I remember last time I looked into this about 8 years ago we spoke with M.Woodiwiss and I think at the time there were international portable pensions where one could offset against income tax on the tax return.  Do you know if these still exist or have the Amt cracked down on them?

 

Secondly would appreciate any advice on the NI contributions - or should we continue paying into both UK and German schemes until further notice or at least Class2 payment possibilities are scrapped....

 

Quote

Where I get stuck and it seems other members do to is understanding the sums.

I will probably end up with about 25 of 35 UK contributions worth about 500GBP pm pension and about 25 of 45 German contributions worth about 1500Euros pm.  Now ignoring Brexit and all that for now, I doubt with the current rules I will get these two sums cummulatively, but reading all the blurb and online info. I guess the 25 year German pot takes precedence and then I may get 10years worth of UK pension as that would make it up to the 35 years where the UK maxes out.

Which would then mean it is not worth paying any more into the uk scheme as the German scheme cancels it out.

Or am I completely mistaken? Or is there no simple answer?

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On 23.2.2018, 08:24:27, PCarnold said:

I doubt with the current rules I will get these two sums cummulatively,

Why?

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Would be nice!  But reading through the complicated DWP advice it seems you apply and receive a govt. pension wherever you are resident in the EU - be it Germany, UK or elsewhere.  If they add up my contributions to do the calculation I would have about 50 years - 25 from each UK and Germany.  Which is over the 45 max. for Germany and 35 max. for UK when paying additional contributions doesn't help anymore.  - Well that is my limited and probably not completely correct understanding.

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OK.

Maybe there is simply a "cap" on the total (UK + DE) numbers of years of contributions they will take into account for the calculation. But this is not what they told you, right?

I work and live in DE but I am also continuing to pay my UK contributions, the voluntary ones, never mind I'm not even brit.

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No - to be honest the DWP couldn't explain it on the phone.

Meanwhile I found more relevent info. on www.deutsche-rentenversicherung.de - in their English section!

Basically I think it says that if you are double paying you can't count those months towards the max amount, be it 35 or 45 years etc, but it could help in calculating the pro-rata amount from the individual countries...

Meanwhile I'm sure Brexit isn't going to help!

 

"Each month will only be taken into account once, even if periods of insurance in Germany and other Member States overlap e.g. because of a change of occupation within a month. If you have paid voluntary contributions in one Member State while you worked and paid compulsory contributions in another Member State, your voluntary contributions will be superseded. They will not increase your theoretical amount, however, they will neither lapse completely. They will be used to assess a separate part of your pension which will be added to the pension and both will add up to your pro-rata pension." 

 

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On 1.3.2018, 12:31:23, PCarnold said:

"Each month will only be taken into account once, even if periods of insurance in Germany and other Member States overlap e.g. because of a change of occupation within a month. If you have paid voluntary contributions in one Member State while you worked and paid compulsory contributions in another Member State, your voluntary contributions will be superseded. They will not increase your theoretical amount, however, they will neither lapse completely. They will be used to assess a separate part of your pension which will be added to the pension and both will add up to your pro-rata pension." 

Can you post the link, please?

So, it could well be that continuing to pay voluntary NI contribution while working here in Germany is not as beneficial as we used to believe...

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On 3/2/2018, 4:39:03, Gambatte said:

So, it could well be that continuing to pay voluntary NI contribution while working here in Germany is not as beneficial as we used to believe

 

Yes this is the question it seems we can't get answered - well not until the time comes to start applying for a pension then they do the calculations based on the rules at the time.

 

Meanwhile I've sent a cheque off to pay about 6 years voluntary class 2s whilst they are still must cheaper than class 3s and whilst I still can before they are scrapped, even though I was working here 

The way I read the information is that you can't use both periods of simultaneous contributions to count towards an overall theoretical pension, but they can help towards the pro-rata from each state....maybe

 

 

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Well now I'm proper fucking confused. I'm still waiting to hear back if I can qualify for for class 2 contributions, but I was hoping to make a large back payment before they are abolished in March 2019. I will probably still do this to at least get me over the 10 year mark, but then wait and see once the Brexit dust settles. Confused.com

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As I have written elsewhere on TT I worked for a German employer (as opposed to being seconded) since November 1986.

The UK credited me with 15 years NI contributions - having found out by chance (thanks to TT even if a little late) I paid

10 years voluntary class 2 contributions for years 2006 - 2016 & again a single year 2016/2017 thus giving me 26 years contributions.

I "win" after about 1 year.  It seems to be important not to contribute for to many years (37 / 35).

 

(It was HMRC who said I was to pay class 2 contributions - at least when I did it.)

 

I don't get a "full" DE state pension since I only contributed for 31 years but both pensions plus a Betriebsrente should keep the wolf from the door.

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On 23/02/2018, 08:24:27, PCarnold said:

. I guess the 25 year German pot takes precedence and then I may get 10years worth of UK pension as that would make it up to the 35 years where the UK maxes out.

Which would then mean it is not worth paying any more into the uk scheme as the German scheme cancels it out.

 

Now I'm confused, my understanding from reading this is that you cannot have maxed out the UK contribution and then accumulate from the German system. Am I understanding this right? I ask because I have 35 years UK contributions and now pay into the German system and will have about 13 years contributions before retirement. Although not a lot, I'll be peed off if itthen means that I don't actually get anymore because the total contributions from both countries are added together rather than treated as 2 separate pension funds.

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Well currently I'm getting both a UK state pension & a DE state pension.

The Germans know about the UK state pension since the application for the UK state pension was made via the DE pension office (thats a requirement if you live in DE).

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16 hours ago, HEM said:

Well currently I'm getting both a UK state pension & a DE state pension.

 

HEM - do you get your full 26 yrs worth of UK pension and 31yrs worth of German pension?  If so this would help my understanding of the maths.

 

My plan with Brexit on the horizon for the record is to get up to 25 years using Class 2s until they are scrapped in a year to at least protect some UK pension, and getting German citizenship (which was quite some paperwork but relatively easy in Köln) to protect the funds I've paid into the German scheme - I'm sure I read somewhere on the Deutsche-Rentenversicherung website that non-EU citizens retiring to a non-EU country are paid only 70% of the pension which I guess depending on any deal could apply to the UK in the years to come.

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6 hours ago, PCarnold said:

HEM - do you get your full 26 yrs worth of UK pension and 31yrs worth of German pension?  If so this would help my understanding of the maths.

Yes.

 

What happens with / after Brexit is unknown at this point in time (in all respects).

If you live outside Germany then the German Finanzamt will tax your German pension from the first Euro - maybe this is where you are getting your 70% from?

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On 07/03/2018, 16:01:35, HEM said:

  It seems to be important not to contribute for to many years (37 / 35).

Please explain if poss. Is it so the pro rata in UK does not exceed the German pro rata? You obviously want more DE than UK cos the DE pension is worth more. Is that logical thinking?

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