Company pension scheme for families better than its reputation

Although employees are not entitled to a company pension from the boss, they can at least require that a contract for direct insurance is concluded.

From the monthly work income, the retirement plan is then serviced month by month.

In most cases, the employer withholds the contractually agreed sum right away in the payroll and deducts this for him. Optionally, the employee himself can pay the contributions. But choosing a good direct insurance policy is extremely important. As experts have found, a good contract brings in 20 years approx. 4.000 euros more in return than in the same period a bad contract. In order to be able to compare the various direct insurance providers, the different policies were to be compared with each other with regard to the guaranteed pension.

For example, a man who has regularly invested 100 euros of his gross salary in a direct insurance policy for 27 years will receive a guaranteed monthly pension of 159 euros from the best provider until the end of his life. With the worst provider, this is only 141 euros under the same conditions. This calculation does not look much different for women either. Thus the best offerer guarantees a monthly pension of 143 euro, the worst pays straight once 128 euro monthly. Although surplus participation is added to all offers, its amount is uncertain. In order to be able to plan precisely for old age, only the guaranteed pension can be taken into consideration.

Riester va. Direct insurance | PlusMinus: Old-age provision and basic benefits

State subsidies for direct insurance

Every employee is entitled by law to save part of his or her salary for a company pension. This is even subsidized by the state, and families in particular benefit from the advantages of direct insurance.

It is also easy for the employer if his employee converts part of his gross salary into a company pension plan.

Currently, employees are allowed to contribute an amount of up to 2.688 euros per year can be invested in a direct insurance policy. This sum is deducted from the gross salary free of tax and social security contributions. The maximum permissible amount is calculated as four percent of the current contribution assessment ceiling in statutory pension insurance. Incidentally, if the income threshold rises, the tax- and social security-free contribution also rises. If the employee took out the direct insurance contract after 2005, this amount is increased by a further 1 percent.800 euros. However, these 1.800 euros tax-free, but not free of social security contributions. At present, therefore, a contribution of up to 4.488 euros per year can be subsidized.

If an employee pays 100 euros per month into a direct insurance policy, this is deducted from gross salary and not from net salary. This means that these 100 euros do not actually cost him 100 euros as well, but significantly less. Family fathers with a high tax burden benefit from this savings potential.

Advantages of direct insurance for the family

Old-age provision for family fathers

The tax-free nature of the contributions means that the policyholder can save.

In addition, at least a portion of the contributions is also supported by the state through exemption from compulsory social security contributions, and the policyholder has the lump-sum option.

A direct insurance policy can be retained even after leaving a company. The later payout from the direct insurance can be claimed by the policyholder or his survivors. In addition, the policyholder is free to choose whether the insurance is to be unit-linked or a classic pension insurance policy. In addition to the guaranteed pension, the policyholder also receives interest on contributions in addition to the tax benefits and is paid out at the end of the term together with the other entitlements.

If the insurance benefits are not paid out until the retirement age is reached, the contributions are also only taxed at a low rate. Direct insurance policies can also be supplemented with protection for surviving dependents and occupational disability insurance. If the employer finances the direct insurance, the insurance premiums can be adjusted in the event of any salary increases. This saves taxes for both sides, the employer and the employee.

bAV – Valuable information as an employee

Entitlement from a direct insurance policy

The entitlement from a direct insurance policy is always non-forfeitable and is retained even if the employee leaves employment.

The contract can simply be transferred to the new employer when there is a change of employer. Optionally, this can also be continued privately (portability).

This transfer is also free of tax and social security contributions. There is also the possibility of making this pension plan non-contributory. However, the pension payments are then proportionally lower. Already at the beginning of the pension term, a partial lump-sum payment is possible thanks to the lump-sum option, which amounts to a maximum of 30% of the saved capital.

Conclusion: Even previously unsettled employees can easily see, when weighing the advantages and arguments, that the direct insurance, which has recently enjoyed a bad reputation, is a very lucrative form of investment, even for families. Due to the potential savings in taxation as well as social security contributions, more money is left over in the end. Since it is well known that the state pension is no longer sufficient to maintain the accustomed standard of living in old age, a direct insurance policy offers the ideal opportunity to create a second financial cushion for old age. The general rule is: if the employer participates in the pension plan, the direct company insurance is the most attractive way for employees to create a good pension plan.