Draft on Private Pension Provision and Pension Savings Depots Discussed
December 4, 2024
Today, the German Bundestag discussed the draft law on the further development of private pension provision and pension savings depots. The aim of the draft is to strengthen private pension provision and make it more flexible and attractive for citizens.
Key Points of the Draft
- Introduction of a pension savings depot: Individuals can make voluntary contributions to a pension savings depot, which is not subject to social security contributions. Withdrawals from the depot are possible at any time, but are subject to income tax.
- Increase in the basic allowance for private pension contributions: The basic allowance for contributions to private pension schemes is to be gradually increased to 4,000 euros by 2025. This means that citizens can deduct more of their contributions from their taxable income.
- Expansion of Riester pension: The Riester pension scheme is to be made more flexible and attractive. For example, it will be possible to switch between different Riester providers and to make additional voluntary contributions.
- Introduction of a “retirement account”: A new “retirement account” is to be introduced, which combines the advantages of the pension savings depot and the Riester pension. Contributions to the retirement account are not subject to social security contributions, but withdrawals are taxed at a flat rate of 15%.
Government’s Goal
The government aims to strengthen private pension provision with the draft law. This is necessary because the statutory pension system is coming under increasing pressure due to demographic change. The government wants to make it easier for citizens to save for their retirement and to provide financial security in old age.
Criticism of the Draft
The draft law has been met with criticism from some quarters. Critics argue that the private pension system is too complex and that many citizens do not understand it. They also criticize the fact that the draft law does not provide enough support for low-income earners.
Further Process
The draft law is currently being discussed in the Bundestag. It is expected that the law will be passed in the first half of 2025.
Entwurf zur privaten Altersvorsorge und Altersvorsorgedepots beraten
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