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Pension Plans

"Rürup" Pension

Introduced in 2005 the German Basic Pension for self-employed and freelancers, also known as "Rürup-Rente" because named after the economist Bert Rürup, is a private pension scheme with state subsidy during the savings accumulation period.

How the "Rürup-Rente" works

Of the four pillars that make up Old-age Provision, the Rürup-Pension scheme belongs to the so-called "Pillar I - basic provision".

Similar to the Statutory Pension Scheme that also belongs to Pillar I, payments into the Rürup-Pension too are tax-deductible, however when receiving payouts in retirement these are subject to taxation.

Reasons against the "Rürup Pension"

  • Smaller payments not retrieveable!
    One regulation allows the insurer to withhold payments if a certain minimum savings amount is not reached. This is a high risk
  • High Fees
    Depending on the type of investment and time available to generate savings, the money paid into such a plan might not even reach the expected payments at retirment. Reason for this is because the higher fees that are deducted in the intial years of the contract. Consequently, especially at the beginning of any contract there are no savings available to generate a pension.
  • Lifelong bond
    Because a cancellation or buyout is not possible, and savings cannot be capitalised, transferred or liquidated, the policyholder is basically stuck with the insurer for life! In grey theory a switch of provider is possible, but very costly.
  • Not inheritable
    Should the policy holder part with this world during the savings phase all the invested money is gone!
    In the event of demise at retirement, pension payments cease immediately unless a costly "guarantee period of pension" was agreed to from the beginning.
  • No protection against seizure
  • Untransparent Offers