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Discounts, contributions, financing: The twelve biggest pension mistakes

2022-09-17T03:09:40.390Z


Discounts, contributions, financing: The twelve biggest pension mistakes Created: 09/17/2022, 04:52 The German pension system is complex. This is why many people keep asking questions. We clear up the biggest pension misconceptions. Munich – Statutory pension insurance has existed since 1889. To date, the system has been repeatedly adapted. These include, for example, the introduction of mother


Discounts, contributions, financing: The twelve biggest pension mistakes

Created: 09/17/2022, 04:52

The German pension system is complex.

This is why many people keep asking questions.

We clear up the biggest pension misconceptions.

Munich – Statutory pension insurance has existed since 1889.

To date, the system has been repeatedly adapted.

These include, for example, the introduction of mothers' and basic pensions.

The problem: With every adjustment and change, new misunderstandings and doubts arise.

Is the pension really safe?

Finanztest

(Issue 10/2022

) has investigated this question - and other widespread theses on the subject of pensions and clarifies many misconceptions about pensions.

The most important points at a glance.

1. Pension contributions have continued to rise.

no

The contribution rate is currently 18.6 percent of the income subject to pension insurance.

And thus only slightly higher than around 1983 to 1984 (18.5%).

It was lower in 1993 (17.5%).

After that, it was always at or above the current level, such as in 1997: at 20.3 percent.

2. The statutory pension is being lowered more and more.

no

Individual pensions do not decrease.

This is excluded by the state pension guarantee.

However, the pension level can fall - it shows the relationship between the size of an average pension and the average income of a worker.

3. I will not get a statutory pension later.

The system is finished.

That is extremely unlikely.

Take the example of the financial crisis: the consequences practically bounced off the pension system.

And now it looks as if the corona pandemic is not causing any lasting problems either.

But that doesn't mean the system doesn't face challenges.

With high unemployment, for example caused by the energy crisis, the contributions would collapse.

The (over-) aging of the population is also problematic for the pay-as-you-go system, since the system is dependent on the fact that there are many high-contribution payers who finance the pensions of the elderly.

But there are ways to stabilize the system, for example through state subsidies, one could also expand the group of insured persons to include civil servants and the self-employed, or raise the retirement age.

4. The pension fund invests my contributions.

She later pays her pension from this.

no

Except for a small reserve, which is intended to compensate for unexpected fluctuations, the statutory pension insurance uses the contributions of the insured to pay them directly to the pensioners.

The insured are credited with earnings points, from which their pension is later calculated, which in turn is then paid by the next generation.

The traffic light government is now planning to enter the so-called capital coverage, in which the money invested should generate income.

Ten billion euros are to be invested as a fund.

That's not much in comparison, though.

In 2020, the income and expenditure of the pension insurance was around 334 and 338 billion euros respectively.

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5. I have to apply for the basic pension for low earners.

No, the pension insurance determines the claims automatically and pays them out accordingly.

However, insured persons must apply for the old-age pension, the old-age pension for the severely disabled and the disability pension.

6. For the basic pension, you must have worked for 35 years and be subject to social security contributions.

no

In order to receive the full basic pension, insured persons must be able to demonstrate at least 35 years of basic pension periods.

In addition to the compulsory contributions from employment, this also includes child-rearing periods or periods of voluntary care and much more.

When it comes to pensions, there are still a few common misconceptions.

© Xavier Lorenzo/Imago Images

7. As a top earner, I should actually get a higher pension.

no

Top earners with a very high salary do not pay pension contributions on their entire gross earnings, but only up to the contribution assessment limit.

It is currently 84,600 euros per year.

8. After 45 years of work, my pension should be higher.

Not necessarily.

It's not just about how long you've worked, it's also about how much you've earned.

That still applies, even if the basic pension surcharge increases the pension for many low-income earners.

9. If I pay less than five years, my contributions are gone.

no

Anyone who has paid into the pension fund for less than five years can have their paid contributions reimbursed once they have reached normal retirement age.

However, it is often cheaper to make up for missing periods beforehand by paying voluntary contributions and thus securing a statutory pension.

10. Early retirement without deductions begins at 63.

no

The pension for particularly long-term insured persons - as it is officially called - is intended to enable long-term insured persons with at least 45 years of insurance to start their pension early without deductions.

That used to be the case when you were 63 years old.

Since the retirement age is currently being raised in stages, the point in time has now been pushed back to 65 years.

At the age of 63 you can also retire today, but only with deductions.

Every month that you retire before regular retirement costs 0.3 percent.

11. There are no deductions once you have reached normal retirement age.

No, the pension deductions for early retirement remain in place until the end of life.

Our free pension newsletter provides you with all relevant news from the economy on a regular basis.

Here

you can register.

12. Whether you receive East or West pension depends on where you live.

no

That depends on the respective places of employment.

Anyone who has worked in Dortmund for 20 years and in Schwerin for 20 years will have their pension calculated from the partial values ​​for East and West.

This also applies to future pension increases.

Source: merkur

All news articles on 2022-09-17

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