Whether it's the payment of pensions, taxes or the amount of the pension, there are numerous myths surrounding retirement. We clarify five of them.
Hamburg – Getting to grips with retirement at an early stage is worthwhile for everyone. Because the sooner you start, the better you can prepare for old age. To do this, it is worth finding out about the pension system. After all, people often only know half-truths when it comes to pensions – and may make mistakes when it comes to retirement planning. We outline five well-known pension misconceptions – and explain why they are wrong.
1. "Pensions will decrease in the future."
No, this is not even legally possible. This is excluded by the pension guarantee. In fact, pensions have actually risen in recent years. This is due to the fact that the development of pensions is linked to the development of wages. So when wages go up, so do pensions. In the event of falling wages, the pension guarantee then takes effect.
2. "The pension fund invests my contributions and pays them to me later as a pension."
That's not true. The pension system works on a pay-as-you-go basis. This means that a large proportion of the contributions paid by insured persons are paid directly to pensioners. Only a small reserve will be retained, which should compensate for unexpected fluctuations, writes the magazine Finanztest.
Instead, insured persons are credited with pension points for their contributions, which are later used to calculate their respective pension. The pensions of today's contributors will then be earned by future generations. This is why we speak of the intergenerational contract.
3. "The pension shall be transferred automatically from the date of retirement."
That, too, is a misconception. Except for the basic pension supplement, all benefits from the pension insurance would have to be applied for, the DRV informs. And insured persons should not wait until the last minute. The DRV advises to submit the pension application three months before the planned retirement.
The German pension system works on a pay-as-you-go basis. Many people are not aware of this. (Symbolic image) © IMAGO / Westend61
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4. "I don't have to pay taxes on my pension."
That's not true. The pension must also be taxed. However, not all pensioners have to pay tax on all their earnings. The amount of the pension to be made more expensive depends on the year of retirement. The proportion of taxation is currently still increasing annually. Those who retire in 2040 will then have to pay tax on their entire salary. However, if the pension is below the basic allowance of currently 10,908 euros, it does not have to be taxed.
5. "If I work in the East, I get less pension."
"On the contrary," says the DRV. "Employees in the East receive more pension for the same salary than employees in the West." At least for now. Because by the end of 2024, eastern salaries will be upgraded with a conversion factor, which will lead to a slightly higher pension for the same income. By July 2024, however, the pension values of East and West should be aligned. Due to the imminent pension increase, which is slightly larger in the East than in the West, this goal will now be achieved a year earlier. (ph/dpa)
