Tips for the Riester pension: Turbosaving with low contributions


Image: Mature couple on bench

Tip: Get the government allowances and tax benefits at the Riester and get more out of your private provision.

Additional old-age provision is indispensable – especially because of the many cuts that workers have to face in the future in terms of statutory pensions. Riester contracts offer a way to supplement the pension.

Secure full state allowances

Each saver receives 175 euros basic allowance annually, if he flows at least 4 percent of his annual gross income from last year in the Riester contract. At 36,000 euros, less the basic allowance of 175 euros would be a total of 1,265 euros. Monthly, a saver would have to pay about 105 euros net in the contract to get the 175 euros donated by the state. If he pays only half, he gets only half of the allowance. If annual gross premiums increase, insured persons must adjust the contribution.

If you have children, the state gives you even more money: For every child born before 2008, there are 185 euros, and for children born in 2008, even 300 euros. For example, a 12- and 8-year-old child will receive an additional 485 euros in supplements a year. However, the state pays the child allowance only as long as the children receive child benefit and are no older than 25 years.

Note : At the same time as completing the Riester contract, you should fill in the application for a permanent allowance in order to receive the state subsidy on a permanent basis.

Riester pension as special expenditure

You can secure even more money if you mark your Riester pension as special expenses in the tax return. Individuals can claim a maximum of 2,100 euros and married couples 4,200 euros – if the latter collect the tax declaration together.

How much money the tax office pays you back depends on the allowances and the marginal tax rate. To determine your expected reimbursement for the Riester pension, you can use the following formula:

(Personal marginal tax rate * [Paid premium-allowance]) – Allowance = Effective tax benefit

With a gross annual salary of 36,000, the marginal tax rate for a single without children is about 36 percent. Add the paid-in contributions of 1,265 euros to the allowance and multiply the total by your marginal tax rate. You will receive a theoretical tax benefit of 518 euros, from which you deduct the basic allowance of 175 euros. Your effective tax advantage is 343 euros. If you pay the maximum contribution of 2,100 euros for state support into the contract, the reimbursement of the tax office would increase:

scenario annual gross allowances Tax refund (minimum contribution of 4%) Tax refund (maximum amount)
Single (without children) 36,000 € 175 € 343 € 581 €


(Spouse) partner as low-income or mini-jobber

If the partner is low-paid or mini-jobber, he should voluntarily pay into the statutory pension (contribution rate 2018: 3.7 percent). At 400 euros a month, 14.80 euros would flow into the pension fund and 16 euros into the Riester contract to collect the full allowance. The advantage: You can claim a maximum of 4,200 euros as special expenses in the tax. This is particularly worthwhile if the full-time partner pays more than 4 percent of the annual gross amount into the Riester contract.

If the partner does not pay into the statutory pension fund, he is only indirectly eligible and only pays the base amount for the full allowance. You can then claim only 2,160 euros (base amount + maximum funding) as special expenses in the tax return and no longer the 4,200 euros. The tax benefit drops and you get less money from the tax office.

Note : If both partners have a contract and one dies, his Riester credit can be transferred without loss to the other. If only one partner has a Riester contract, he must reimburse the allowances previously paid by the state.

Additional grant for trainees and students

Apprentices and career starters can get an additional subsidy from the state for the Riester pension. Riester savers under 25, who are employed under social insurance, get the annual allowance of 175 € still the entry-level professional bonus of 200 €. Most apprentices, who start their education for the first time and did not have any income the year before, only have to pay the base contribution of 60 Euro.

State Riester promotion abroad

Retirees who relocate their old-age residence to a country of the European Union will be able to keep state allowances in the future. The Riester eligibility is no longer linked to the unlimited income tax liability so that no longer resident in the country. So far, the state has been demanding that the allowances be withdrawn on a subsequent move to an EU country. Even for self-occupied real estate within the European Union or within the European Economic Area, the state-subsidized residential Riester can now be used. Employees who live abroad but are employed in Germany now also benefit from the allowance. Even if they do not pay their income tax in Germany.

How much is the Riester pension taxed?

In principle, the Riester pension is fully included in the calculation of taxable income. However, this does not necessarily mean that the Riester pension is really fully taxed. Because that depends on your tax burden in old age. As a rule, this is lower than for gainful employment. Since your income is usually lower, you pay less tax on your income as the Riester pension.

While contributions to the statutory health insurance are due for the statutory pension, you do not have to pay for your Riester pension because it is classified as a private pension. So, all in all, for the normal pensioner, there is at most a small tax burden on the Riester pension in old age.

Note : Currently (as of 2018) pensioners receive up to € 9,000 in income (single) and € 18,800 (married) each year completely tax-free. Although this value increases every year, the statutory pension will be taxed at 100 percent by 2040. In 2018, 24 percent of the pension is tax-free, in 2027 only 13 percent.

payout options

Only 30 percent of the capital saved can be paid out at the Riester Treaty in one fell swoop from the age of 62 years. For contracts signed before 2005, it is only 20 percent. In addition, the interest and income accrued in the pension phase can be paid out at once. The remaining assets must then be invested for the lifelong pension, ie usually for the period after the age of 85 years.

Note : Small-value pensions, which account for less than one percent of the reference value according to § 18 SGB IV (as of 2018: 30.45 euros), can be paid out in one go at the beginning of the pension.



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