Private retirement provision
The third support of the triple-support scheme of retirement provision in Germany is private retirement provision. In this field, the citizen themselves can decide in what way they would like to save funds for when they are old.
To promote private retirement provision, which has become necessary in Germany, the German State took a few measures in the past years to facilitate putting away money from their income for their retirement for citizens. Here, the examples of the Riester and the Rürup pensions are to be mentioned. With the Riester pension, which can be beneficial to a very wide group of people, the saver can count on tax reductions and supplementary state allowances that, on the one hand, should help increase the percentage of income available for pension, and, on the other, help ease the financial burden during the saving period. The Rürup pension is meant for self-employed people in the first place, who cannot use the Riester pension. Here, savers can benefit from tax reductions if they save money for the old age. Both pensions have in common the fact that the money saved up before the allowance is backed up by social benefits.
Of course, the private pension plans endorsed by the state can be supplemented by completely private efforts, such as private retirement insurance or investing into one’s own home or into rentable estate. Overall, in Germany, one can see that retirement provision in Germany tends to become more of a privately sorted out matter.
