As most Germans would now have to be aware of, statutory pension benefits will barely be sufficient in the long term to meet the financial needs of older people. All the more important is the conclusion of a private pension plan. Especially for those who are about to start retirement and have not taken private care of their financial future in old age, we recommend an immediate pension.
One-time payment in the immediate pension
In contrast to classic private pension insurance, in which contributions must be paid over a long period of time, the immediate pension, also known as immediate retirement insurance, builds on the principle of the one-time payment. Therefore, it is not a disadvantage, only late in the age to make a one-time payment for the pension, because the pension is paid immediately upon receipt of the sum monthly.
An annuity insurance in the form of an immediate pension is particularly advantageous if a higher amount of money can be invested, for example by personal austerity measures, an inheritance or by the payment of a life insurance. This amount guarantees the insured an immediate, life-long pension.
What pension amount is secure?
In the case of the immediate pension, just as with the classic pension insurance, a distinction is made between a guarantee pension and profit participation. The guarantee pension is the amount you will receive in any case. The guaranteed interest rate for a pension insurance currently stands at 0.9 percent (2017). The surplus participation you receive additionally. However, how high these are depends on how well your insurer is managing its capital.
In order to get as high a monthly pension as possible from the immediate pension, the financial strength of the company should be taken into account when selecting the respective financial institution and the surpluses of recent years also taken into account.
Dynamization of the pension amount
The lifelong immediate pension can be paid out in different forms:
- Constant: The pension remains the same monthly.
- Dynamic: The amount of the pension increases annually. Thus, the loss of value is counteracted by inflation.
The customer must decide before starting payout when he wants to profit from the surpluses. It is better to initially pay only the guarantee pension. It increases over the years by allocating surpluses. Advantage: once you have reached a pension amount is maintained. Those who immediately pay off the highest initial pension, risk later pension cuts.
Pension guarantee period and premium refund
If you opt for the immediate pension, you can additionally arrange a pension guarantee period and a premium refund. Both measures ensure the payment of the pension or total capital to survivors if you die. Through the warranty period, the monthly pension will continue to be paid to your survivors, such as your spouse, until the expiration of an agreed period. After that, your family members are not entitled to the capital of your immediate pension.
With agreed premium refunds, the insurer pays back the paid contribution to the heirs in the event of death. However, if you opt for this option and for the pension guarantee period, you will have to expect lower pension payments as the insurance company pays part of your lump-sum payment for these collateral.
Of course, the payment start of the immediate pension insurance can also be postponed, for example because one is still in professional life and has covered his financial needs through income. In any case, an immediate pension allows a secure pension payment, which can also be extended by a survivor’s protection.
Advantage of the immediate pension: the taxation
In contrast to subsidized retirement products such as Riester or Rürup Rente, only the income component of the immediate pension must be taxed. This depends on the retirement age. Those who receive retirement benefits at the age of 65 only have to pay 18 percent of their monthly pension payments. With a pension of 1,000 euros a month, it is only 180 euros, which are relevant depending on the personal tax rate.
Percentage of monthly pension payments on the immediate pension:
- 61 years: 22 percent
- 62 years: 21 percent
- 63 years: 20 percent
- 64 years: 19 percent
- 65 years: 18 percent
- 67 years: 17 percent
- 69 years: 15 percent
Allow immediate pension to be calculated
Computers allow you to calculate your immediate pension. But is an immediate pension as a private pension suitable for you at all? This question should be clarified first and in most cases it requires in-depth advice. Under certain circumstances, you can even find a retirement plan that will give you a better pension.