A German private pension plan works on the same principles than any other pension plan you can purchase in the world, i.e. the policy holder agrees to transfer a certain savings-amount for a certain period to the insurer, who in return guarantee to return a fixed capital payment or fixed pension, either for a pre-defined time frame or for life. On top of the guaranteed payment(s) the insurer will add a non-guaranteed amount on top, which is made up of various profit participation instruments.
Types of Pension Plans
