Combination of private health insurance and Rürup/state pension

[AngloSachsen 17]

Hello,

I have various pensions in various countries and want to top them up a bit in the last 11 years before retirement. I am freelance.

 

I am paying a small amount monthly into a Rürup pension (thanks to John Gunn for his help with that a few years back) and have some credits in the German state pension from previous jobs/ex-husband's job. I also have private health insurance.

 

The two options I am considering are paying more into the Rürup or making voluntary contributions to the German state pension.

 

Both are formats where you can claim your contributions off tax but then have to pay tax on the payout when you retire so there is no difference there. Most articles I have read say that the state system has been a better return for your money than Rürup or private pensions over the last ten years on average.

 

I have also read that the German state pension pays 7.3% on top of your pension towards private health insurance. The Rürup pension doesn't seem to pay this. As the state pension pays 7.3% extra for PKV, it seems to make more sense to pay into the state system, even assuming that the "returns" were the same. 

 

Is there something I am missing or have misunderstood? Of course it is a gamble in terms of returns but it seems to make more sense to pay into the state system than extra into the Rürup.

 

All help gratefully received

[PandaMunich 16,086]

It's a much better investment to pay NI contributions.

They reduce your taxable income the same way that German public pension insurance or Rürup contributions would.

Please read:

[AngloSachsen 17]

Thanks PandaMunich :). That's definitely true. I pay NI class 2 contributions and there's no better return on your money than that as far as pensions are concerned. 

 

I would, however, appreciate any comments about the PKV combined with German state pension issue.

 

Thanks in advance.

[PandaMunich 16,086]

54 minutes ago, AngloSachsen said:

I would, however, appreciate any comments about the PKV combined with German state pension issue.

Yes, if you have private health insurance, DRV pays a subsidy of:

• 0.5 * (14.6% + average_Zusatzbeitrag_of_all_public_health_insurers) * amount_of_your_DRV_pension

You have to apply for this subsidy at the same time as you apply for your DRV pension, bit with a different form: https://www.deutsche-rentenversicherung.de/DRV/DE/Ueber-uns-und-Presse/Presse/Meldungen/2021/210112_zuschuss_krankenversicherung.html

 

Please note that only DRV pays out this subsidy, other public pension insurers, like, for example, the Ärzteversorgung, do not.

Whether DRV will still pay out this subsidy by the time you retire, is anybody's guess.

 

I have written about this in here:

[PandaMunich 16,086]

But before you consider voluntarily giving money to DRV (also known as "money down the drain"), please read this thread, and please pay special attention to kato's answers:

I'm not a fan of Rürup either:

In my opinion, the drawbacks of both DRV and Rürup mean that only people who pay a 40% income tax rate should consider them - in their cases, the tax saving outweighs the drawbacks.

And even they should only look at low-commission, fund-based Rürup, see here: https://www.finanztip.de/ruerup-rente-basisrente/test-ruerup-rentenversicherung/

• Wer seine spätere Rente durch Rürup aufstocken will, kann mit Aktienfonds ansparen. Eine Garantierente gibt es nicht: Wir empfehlen die fondsgebundene Ren­ten­ver­si­che­rung ..., Condor (Tarif C79 B ) und den Fondssparplan bei Raisin Pension ETF Rürup (vormals Fairrürup).
•  
• Those who want to supplement their later pension through Rürup can save with equity funds. There is no guaranteed pension: We recommend funds-based pension insurance ..., Condor (tariff C79 B ) and the fund savings plan at Raisin Pension ETF Rürup (formerly Fairrürup).

 

[AngloSachsen 17]

Thanks for all the interesting references PandaMunich. I've certainly got a lot of thinking to do!