News Announce company pension plans: An impossible venture?
Monday, 08.02.16 , written by Anja Schlicht Employees can build up a financial cushion for retirement with occupational pensions. They benefit from some advantages, but with certain disadvantages. Some insured therefore play with the idea to terminate the company pension. But this is usually not possible. Frustrating: Termination of the BAv mostly impossible
The conclusion of a company pension can be advantageous , especially if the employer participates in the deposits . Since the contribution for the old-age provision goes away from the gross income, the social contributions, for example for the care and health insurance, reduce for employees.
In addition, the revenues from the BA are taxed only at the start of the payday so that employees benefit from lower tax payments. Because their tax rate is usually lower in old age than during working life.
Cancel company pension due to disadvantages
Occupational pensions also have disadvantages that are not always adequately informed. For example, full pension and health insurance contributions are incurred on the pension, which significantly reduce the company pension . Critics therefore speak of a minus business. If this only becomes apparent after the decision for the BAA, one wonders how sensible it is to terminate the company pension plan. An answer to this is unnecessary in most cases.
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Termination of occupational pension plans not provided
The termination of company pension is usually not possible. The legislator stipulates that the contributions are used for old-age provision and therefore only be paid out at the age of retirement . Sometimes insurers can allow exceptions. However, since employees benefit from tax savings in the pay-in phase due to a lower payroll tax, the state can get them back if the contract is terminated early. The repayment is reduced, so this step usually proves to be unprofitable .
Payment of the BAV only at the retirement age
If the company pension scheme is financed by employers, there is another hurdle. Because the boss acts as policyholder . He must first sign a waiver and thus transfer his so-called policyholder characteristics to the employee. Then comes the possibility to examine more closely whether the termination of the occupational pension is somehow feasible. Almost always, however, that the payout is granted only at retirement age. To bridge short-term financial bottlenecks , it therefore makes little sense to touch on the company pension scheme.
Unpunable claims in the case of occupational pension
The BAA claims are vested. If only the employee pays money into the occupational pension scheme, for example through the salary conversion, this applies immediately. If the employer participates, there is a three-year period before the occupational pension is actually maintained when changing jobs.
Non-occupational retirement provision instead of termination
As occupational pensions can not usually be terminated, the alternative option is to make the contract non-contributory . If necessary, fees will be charged to the insurer. At the same time, insured people have to think about how to prepare for old age as an alternative . Because without any additional financial cushion, they can not keep their usual standard of living in retirement. In addition, the statutory pension is usually not sufficient. Many people threaten without supplementary provision for the old age even old-age poverty.
Tip: Find out which pension options fit your financial scope, with a non-binding offer for retirement.
Alternatives to company pension plans
As alternatives to occupational pensions are available state-subsidized pension plans . While the Rürup pension is recommended by its tax advantages, especially for high earners, but also for self-employed and freelancers, the Riester pension benefits by their state allowances, especially families.
In general, the right financial security for retirement depends on several factors:
- How much risk or security do you want?
- How much money can you cover monthly or annually?
- Should the financial cushion be paid in one go or monthly?
Those who have answered these questions for themselves and are looking for optimal retirement products will soon be overwhelmed by the immense choice . For this reason, it is advisable to rely on an expert in private retirement provision who can reliably find care offers tailored to individual needs.
- Here you will find tips and further information on old-age provision. >
- Anja Schlicht
- editorial staff
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