How do different forms of retirement savings affect taxes?
October 4, 2023 | 40,00 EUR | answered by Georg Nitsche
Dear tax advisor,
my name is Verena Ratzberg and I am currently focusing intensively on the topic of retirement planning. I am facing the decision of which form of retirement planning is most tax advantageous for me and therefore I am hoping for your expert assistance.
I have considered various forms of retirement planning, including Riester pension, company pension scheme, and private pension insurance. I am aware that each of these forms can have tax implications, however, I am unsure of the specific differences in tax treatment and the tax advantages and disadvantages they bring.
My goal is to find the most optimal tax planning for my retirement, in order to achieve tax benefits both during the savings phase and in retirement. I am concerned that without professional advice, I may overlook tax pitfalls and end up getting less out of my retirement planning than would be possible.
Therefore, my question to you is: Could you please explain in detail how the different forms of retirement planning such as Riester pension, company pension scheme, and private pension insurance differ in terms of tax treatment? What tax aspects should I consider when choosing my retirement plan and what possibilities are there to benefit optimally from my retirement planning in terms of taxes?
I thank you in advance for your support and look forward to your expert advice.
Sincerely,
Verena Ratzberg
Dear Mrs. Ratzberg,
Thank you for your inquiry regarding retirement planning and tax optimization. It is very positive that you are addressing this important topic early and striving for an optimal design of your retirement plan. I would be happy to explain the tax differences and aspects of the various forms of retirement planning to you.
Let's start with the Riester pension. This form of retirement planning was introduced in 2001 and offers state allowances as well as tax benefits. When you contribute to a Riester pension, you can deduct the contributions up to a certain maximum limit of currently 2,100 euros per year as special expenses in your tax return. In addition, you receive annual allowances from the state, which depend on your income and the number of eligible persons in your household. The Riester pension is particularly attractive for individuals with low income or families with children, as they receive additional financial support.
Company pension schemes (bAV) are another form of retirement planning, where you contribute to an insurance policy through your employer. Contributions to bAV are tax and social security free, allowing you to reduce your taxable income and save taxes. You have the option to choose between different implementation paths such as direct insurance, pension fund, or pension commitment. bAV is particularly suitable for employees, as it is taken out through the employer and often offers more favorable conditions.
Private pension insurance is an individual form of retirement planning, where you regularly pay contributions and later receive a lifelong pension. Contributions to private pension insurance can also be deducted as special expenses for tax purposes, reducing your taxable income. In addition, pension payments in retirement are subject to taxation at the personal tax rate.
When choosing your retirement plan, you should consider the following tax aspects: the level of tax incentives, the tax treatment of contributions and pension payments, the tax implications on your taxable income, as well as the flexibility and availability of the accumulated capital.
To optimally benefit from the tax advantages of your retirement plan, I recommend seeking individual advice from a tax advisor. They can analyze your personal situation, take into account your goals and wishes, and provide you with tailored solutions and recommendations for your retirement plan.
I hope this information has given you an initial overview of the tax differences in the various forms of retirement planning. If you have any further questions, please feel free to contact me.
Best regards,
Georg Nitsche
