In three cases, voluntary pension payments are particularly worthwhile:
- You are employed beyond the age of 50 and are considering retiring earlier. However, you want to avoid pension discounts.
- You are self-employed and currently do not provide for old age. Then you should take care of basic coverage: either through voluntary contributions to the statutory pension insurance ( DRV ) or through a Rürup pension.
- You are not currently covered by statutory pension insurance, but have paid in for a few years, raised children or cared for relatives and have already accumulated pension points. You are missing contribution years to be entitled to a statutory pension.
What is useful about making voluntary contributions?
Voluntary contributions are useful if you inherit or receive a large amount from severance pay or life insurance. You should carefully consider when to pay in and whether to pay the sum in one go or in part.
If you make the special payment a few years before you enter retirement early, secure your pension points in accordance with the current calculation bases for the pension. This can be worthwhile, because: If the economy continues to develop positively in the next few years, pensions will probably continue to rise. They would then have to put more money on the table to finance their pension compensation.
On the other hand, it can also make sense to spread the special payments over several years. Because you can only deduct contributions to pension insurance from the tax within certain limits: The maximum amount in 2019 is EUR 24,305 (2020: EUR 25,046), of which the tax office applies a fixed percentage (2019: 88 percent, 2020: 90 percent) . In case of doubt, get advice from the pension insurance company.
Ultimately, whether the voluntary contributions pay off from a return perspective depends on how long the insured person lives. In the event of an early death, at least the widow or widower has a higher pension. When the special payment "pays off" - i.e. when you get your (net) single contribution in the form of (net) pension payments - depends on the tax rate you have during your employment and later as a pensioner.
Example: Let us assume that you pay around 35 percent income tax during employment and 20 percent during retirement, your additional payment of 21,000 euros paid off after a good 17 years.
OK, so specifically for freelancers and self-employed, how does it work?
There are various ways for the self-employed to acquire the right to payments from the statutory pension insurance scheme.
Voluntarily compulsory insurance
The self-employed can take out compulsory insurance voluntarily. This is called compulsory insurance upon application. They must submit the application within five years of becoming self-employed. Anyone who pays the standard contribution in 2020 will transfer around EUR 592 (West) or EUR 560 (East) per month. However, it is also possible to pay income-related contributions on request. For this, you have to prove your income with an income tax assessment. A contribution between just under 84 and 1,283 euros (as of 2020) is possible.
As a business founder, you can pay half the regular contribution in the first three years. But be careful: as long as you are self-employed, this decision cannot be reversed. You should therefore seek advice from the German Pension Insurance as to whether compulsory insurance makes sense. The advantage over voluntary contributions is that after five years of insurance, you are entitled to a disability pension in addition to survivor protection. If you apply for compulsory insurance, you are also entitled to an allowance for a Riester pension.