With tax class 5 in old age poverty?

This is how your tax bracket actually affects your pension

Created: 08/05/2022, 10:38 am

Spouses are faced with the choice of tax class shortly after the wedding.

But which one is right for you?

Does tax class 5 affect your pension?

Again and again the appeal is made to married women: Don't set yourself up in tax class 5, don't make your salary small.

It would take revenge – at the latest when you retire.

But is that really true?

Yes, but not in the way you think.

Spouse splitting bad for the pension?

Married couples and life partnerships that do not live separately and do not choose individual assessment are taxed in Germany with the spouse splitting.

Here, the joint household income is taxed and not the individual income of the spouses.

With spouse splitting, your joint taxable income is divided by two – the amount is therefore split.

The taxes are then calculated according to the income tax rate and the amount is doubled again.

The choice of tax class has no effect on the actual annual tax to be paid, but perhaps on the pension?

After all, the spouse with tax class V has much less on the payslip and is disadvantaged by the system, as many experts have been finding for years.

Tax class 5 is chosen for the woman in many marriages.

Does that have disadvantages later in retirement?

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The tax class has no influence on the pension

Currently, the pension contribution shared between employer and employee is 18.6 percent.

The employee pays 9.3 percent of the gross salary, i.e. the salary before taxes and social security contributions, into the pension fund.

And that's why the tax bracket you choose doesn't affect future pension payments.

The contribution amount and thus the amount of your later pension simply has nothing to do with the amount that ends up in your account after deducting all due contributions.

But why then does the assertion that the poorer tax bracket drives women into poverty in old age persist?

Because indirectly it is not wrong after all.

Tax tricks: How to save money on your tax return

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Therefore, the tax class has an indirect influence on the pension

Anyone in tax class V chooses this because the salary is significantly lower compared to partners in tax class III.

This is usually due to part-time employment due to childcare, but also to lower qualifications or a variety of other reasons.

Anyone who earns less also pays in fewer pension contributions, which means that the pension paid out later is also lower.

Child-rearing periods, which often justify part-time work, are now “rewarded” in the pension.

Converted, one year of child-raising time brings you about 34 euros in pension per month, according to the German pension insurance.

But the disadvantage cannot be completely eliminated and so tax class V does not have a direct negative impact on your future pension, but rather an indicator of a lower old-age pension.

Do you still want to work part-time?

Then plan carefully with these tips.