News Article: A Closer Look at the Rürup Pension as a Reliable Retirement Option for Self-Employed in Germany
Undervalued Advantages of the Rürup Pension Scheme
In the three-pillar model of retirement provision in Germany, the Rürup pension, also known as the basic pension, stands out as a viable alternative for self-employed individuals and freelancers who may not have access to the statutory or occupational pension systems.
The Rürup pension is a state-subsidized private retirement plan, primarily designed for those who often find themselves excluded from other state pension schemes. Unlike the Riester pension, which targets insured employees and families, the Rürup pension offers unique advantages that make it an attractive choice for self-employed individuals.
One of the key advantages of the Rürup pension is its tax-deductibility. Contributions to the Rürup pension are considered special expenses and are tax-deductible up to a certain limit, making it particularly attractive for high earners and self-employed individuals looking to reduce their taxable income.
Another advantage is that the Rürup pension is not subject to means testing or repayment conditions, unlike the Riester pension. Upon retirement, the pension is paid out as a lifelong annuity, providing stable retirement income. Furthermore, the accumulated capital in a Rürup pension is generally protected from seizure in the event of insolvency or bankruptcy.
Comparatively, while occupational pensions often include employer contributions and statutory pensions provide a baseline retirement income, the Rürup pension specifically serves those with less access to these benefits and offers tax advantages that traditional private pension plans typically lack.
The Rürup pension comes in various forms, including classic pension insurance, hybrid guarantee policies, pure fund policies, and ETF savings plans. However, it should be noted that unlike purely private pension plans, the Rürup pension typically does not offer a lump-sum payout and may not be as flexible.
In summary, the Rürup pension stands out as a reliable and tax-efficient retirement provision for self-employed individuals and freelancers in Germany. Its tax deductibility, lifelong annuity payments, and creditor protection make it a favourable choice compared to purely private pension plans that often suffer from higher costs and lower returns. However, it offers less flexibility than investing in ETFs or real estate, which some experts suggest may provide better long-term growth.
- Up to €25,787 per year for singles and €51,574 for married couples can be claimed for tax purposes with Rürup pensions.
[1] German Pension Fund (Deutsche Rentenversicherung) [2] Investopedia - Exchange-Traded Funds (ETFs) [3] Deutsche Bank - Die Basisrente für Selbstständige [5] Bundesverband der Deutschen Arbeitgeberverbände - Privatpensionen
The Rürup pension, a state-subsidized private retirement plan, offers unique tax advantages for high earners and self-employed individuals, allowing up to €25,787 per year for singles and €51,574 for married couples to be claimed for tax purposes. On the other hand, when considering personal-finance and investing strategies, it's worth noting that ETFs might provide better long-term growth compared to many Rürup pension plans due to their flexibility.
