Fear of poverty in old age: Many voluntarily pay more pension contributions

Dhe Christmas business may only get going slowly, but the supplementary pension business of social security is doing better than ever. The statutory pension insurance is currently benefiting from the fact that many are making use of the option of avoiding deductions in the event of early retirement with special payments – or simply topping up their earnings if they continue to work until the end. This year, this income has increased by no less than 25 percent compared to the corresponding period of the previous year.

As the Deutsche Rentenversicherung Bund reported at its meeting of representatives this Thursday, from January to October income from contributions to compensate for pension deductions exceeded the threshold of 600 million euros. For comparison: In the first ten months of 2021, voluntary contributions amounted to around 480 million euros. There was also a year-end spurt in November and December. A total of around 752 million euros in contributions to compensate for later reductions in pensions were paid to the pension insurance scheme in 2021. Even that had been an unusual amount. Five years earlier it had been just 86 million euros.

Next year it will be even more expensive

Why is there such a strong plus again this year? “One reason for the increase in contributions this year will probably be that insured persons can still benefit from more favorable conditions when offsetting deductions if they decide to make a special payment by the end of the year,” says Christian Amsinck, CEO of the German Pension Insurance Association. According to him, from January 2023 the contributions to be paid to compensate for pension deductions will be around 11 percent higher. The reason is that the average salary of all insured persons will be higher next year than this year. It increases from 38,901 euros to 43,142 euros. The average salary determines how much a pension point costs, i.e. the future pension entitlement.

The regular retirement age is currently increasing gradually from 65 to 67 years; those born in 1958 retire at 66, those born in 1961 at 66.5 years. For example, if you want to stop working three years earlier, you have to accept a pension deduction of 10.8 percent – ​​for the rest of your life. Those who do not want this can compensate for the deductions with special payments. Anyone who is at least 50 years old and has at least 35 years of insurance when they plan to retire can do this.

The pension insurance cites the following example: With a pension of 1000 euros, the 10.8 percent deduction is less noticeable at 108 euros per month. In order to compensate for this deduction, around 24,300 euros would have to be paid in at the moment. All special payers retain the right to retire at regular age – with increased pension benefits.