Pension – what you need to know

Even if you don't really feel like it, sooner or later you'll have to deal with it anyway. Better earlier. So go ahead – it's not that complicated.


Pension - what you need to know


Logically, as a young person you don't necessarily like to think about old age. Your own pension still seems a long way off. The only thing is that your pension depends on how much you pay in as a young person. That's why it makes sense to learn early on how the pension system works.

How is the pension made up? What is the German Pension Insurance? When is the Riester pension worthwhile? We have summarized some important points.

The compulsory pension

Most people in Germany are compulsorily insured with the German pension insurance. This means that they pay a portion of their income into the pension scheme every month. How much pension you will receive later in your old age is calculated on the basis of how long and how much you have paid in. The more money you pay into the pension fund at a young age, the higher your pension will be later.

For some occupational groups, it is not the German pension insurance that is responsible, but another agency. This applies, for example, to civil servants, doctors and farmers. But the principle is the same.

If you are not employed but freelance, you generally have to take care of yourself. He can also be insured through the German pension insurance, but must apply for it. Self-employed people can find more information that is important for them here.

The German Pension Insurance

If you are insured through the German pension insurance, you will automatically receive regular information about how much pension you would receive if you retired immediately – and how much it would be if you continued to work until the statutory retirement age. So you always have an overview of how you are positioned. You get this info from the age of 27. Lebensjahr or if one has paid in for five years.

On the website of the German Pension Insurance you can find individual info pages for different addressees like pupils, students, trainees, vacation jobbers or people doing voluntary service. If you have any further questions about pensions, you can contact one of the 16 regional offices of the German Pension Insurance Scheme throughout Germany to arrange a consultation.

Company pension insurance

Employees can also take out pension insurance through their employer in addition to the compulsory insurance through the German pension insurance fund. The takes care of the type of facility and organizes the payment of contributions and often even finances it entirely. So it is definitely worth asking your employer how it is handled in the company, even if you only have a part-time job or don't earn much as a young professional.

Private retirement provision

In order to have more later in old age than just the mandatory pension, you can of course also look elsewhere. There are many different ways to invest your money so that it increases.

You can take out a private pension contract. You decide individually how much you want to pay in each month and when you want to receive the money you have saved.

You can invest in equity funds or buy an apartment, for example. No one can predict with certainty how much money will come out later, it depends on the economic development.

You can also take out a private life insurance policy. Money can also flow from this per month later in old age. One example is so-called unit-linked life insurance policies. Here the profit is financed by the price of an equity fund. This way is particularly risky.

In any case, it is important to inform yourself well and not to sign a contract hastily, which may involve great risks. The German Pension Insurance has compiled its own information page on the subject of private pension provision.

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