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The Grand Coalition has agreed last weekend to more money for one to one and a half million poor retirees and four million workers' pensions.
Much has been written about the basic pension compromise, which provides more money for low-income pensioners. With 1.5 billion euros per year to be helped, on average, there are so affected people 1000 euros a year. Much less attention has been given to improving the millions of retirees.
As of 2020, company pensioners will save 1.2 billion euros in cash contributions annually
So what changes? A new allowance agreed by the coalition ensures that you as a retiree have to pay over 1.2 billion euros less contributions to the statutory health insurance and long-term care insurance. Assuming that the bill passes this year the Bundestag, many of you will save over 25 euros a month - 300 euros a year.
The starting point for the company pensioner financial injection is a decision of the red-green coalition in 2003. At that time, the government majority decided that retirees from 2004 must pay the full contribution to health insurance and long-term care insurance - alone. The billions syringe helped the health insurance companies from a financial hole.
If this alone had caused a stir, a special refinement of the new regulation put the company pensioners on the verge of ruin. All the old contracts were affected, including millions of contracts that were concluded with the certainty that they would not have to pay into the social system for this pension. Because quite a few savers had already paid for health insurance contributions for the money they put into the company pension.
Pacification in the long-term dispute
The often double amount was at least not required for small occupational pensions, but only from 155 euros a month. But that still affects four million of the 6.5 million pensioners. Especially annoying for those affected: you have to pay the taxes on the full occupational pension - and not only on the amount that exceeds 155 euros.
A wave of complaints and political protests followed, hardly a senior group is politically as well organized as the company pensioners. Pensioners worked their Bundestag members, the Bundestag dealt in the past and the current legislature with the problem, lawsuits went to the Federal Constitutional Court.
The health insurance funds currently collect more than six billion euros a year from the company pensioners. But all complaints remained in vain for a long time. In the spring of 2019, Chancellor Angela Merkel had personally prevented a 3 billion euro reform proposal that her health minister Jens Spahn had planned to pacify her mind.
It was not until last weekend that the change of heart came: although the government did not want to reverse the regulation, it did manage to take the lead for the future of double contribution payments.
For 2020, the first scarcely 160 euros occupational pension will no longer be payable, no matter how high the occupational pension is. This means: Depending on the health insurance, company pensioners save around 18 percent on health and long-term care insurance. That makes almost 29 euros a month. And the threshold of 160 euros will be adjusted automatically in the future year by year to the rising pensions.
So now also benefit the four million pensioners who have put a lot of money for a large extra income aside. Nearly two million draw significantly more than 300 euros pension, more than two million between 160 and 320 euros.
- To whom does the new regulation really help?
The point is that in the East, there are fewer workers in employment, and women tend to pay less into the company pension. According to figures from the Working Group on Occupational Pensions (aba), 60 per cent benefit men but only 40 per cent women. And only one in eight relieved workers resides in the East. This can be seen as compensation for the women and men from the East, who will benefit from the basic pension.
- Pay off in one go - a less good idea
The health insurances will automatically adjust the contributions from January 2020 onwards. Retirees on pension benefits, or those who have paid their pension in one fell swoop and pay social insurance for more than 10 years, do not have to do anything.
It is different for future company pensioners. You should recalculate which pension variant is the best for you. Many can decide whether they want to receive the pension immediately in one sum or actually as a pension.
One question was always after tax: Old contracts before 2005, in which taxed income was paid, can be paid tax-free in one fell swoop. In recent contracts, depositors have saved taxes on saving, but have to pay taxes as they get older. That remains the same.
- Retirees have to calculate exactly in the future
With the health insurance, however, it must be precisely calculated: This is due to the peculiarities of the introduced contribution assessment for company pensioners.
Decisive for the contribution to the health insurance and long-term care insurance is either the pension itself, or in the case of a payment in one fell swoop a notional pension, in which the health insurances distribute the payment mentally to 10 years (120 months) and thus calculate the contributions due.
What does the fictional pension mean? It ensures that health insurance premiums are much faster than real pensions. 160 euros by 12 months are 1920 euros, 10 times 19.200 euros. So anyone who pays out more than 20,000 euros in a single pension in 2020 must pay health insurance contributions. Less than the 3,000 euros that have been due, but just about 18 percent of the sum that goes beyond the 19,200 euros.
Who chooses the monthly payout, may in the future with 50,000 euros on the retirement account to retire, but must pay no contributions, because the insurer even with such high sums only pensions of just under 160 euros or even less.
With not so rare 100,000 euros on the company pension account, the difference is even clearer. The notional pension amounts to 800 euros, month after month, 115 euros would be due for health and long-term care insurance - at least 13,800 euros over 10 years.
In the real pension, only 320 euros flow into the account, but the social security contribution is only 29 euros, which is just under 3500 euros in the first 10 years. So in the first 10 years, 10,000 euros less for the box office.
Most retirees today decide to have their old age savings paid off in one fell swoop.
It does not have to stay like this.
