In the three pillars of retirement provision, a distinction is made between statutory, occupational, and private retirement provision. The statutory retirement provision is a state pension scheme. It is financed through a pay-as-you-go system. This means that the contributions are not saved but paid out to current retirees (the so-called generational contract).

The occupational retirement provision arises from an agreement within an employment relationship. A distinction is made between employee and employer-funded occupational retirement provision.

With private retirement provision, the policyholder has a savings plan, where typically savings are accumulated through monthly contributions. From a contractually specified point in time, a certain amount can then be paid out monthly.

Due to demographic changes, the ratio of contributors to retirees is expected to change significantly in the future, hence a noticeable decline in the statutory pension level is anticipated. Company pensions are also not necessarily advantageous for everyone, especially considering that complications often arise with an employer change.

Therefore, one should start thinking about private pension provision early on. The foundation for later is laid in young years. That is why it is important to set aside money as soon as one enters the profession. With good planning, this is also possible with a smaller budget.

Our assumptions for the individual personal details are as follows:

• Costs: Our pension calculator is all-inclusive. This means all fees for Ginmon as well as the product costs of the ETFs we use are taken into account. You can learn more about our fees here.

• Inflation: In our model, we assume an inflation rate, i.e., a price increase, of just under 2%, which corresponds to the ECB’s mandate for the euro area.

• Taxes: For the sake of simplicity, taxes are continuously deducted from the yield in our calculations. The taxes every German must pay on capital gains amount to 26.375%. This consists of 25% capital gains tax and 5.5% solidarity tax. For investors who belong to a church, an additional church tax of 8% or 9% is added. This increases the overall tax rate to 27.8186% or 27.9951%, respectively. In our calculation, when selecting the “Subject to church tax?” option, a tax rate of 9% is applied.

The pension calculator’s logic is as follows:

• Expected Return: The weekly average yield, which is based on historical data, is used for the calculation in the pension calculator. It’s important to note that past performance is not an indicator of future returns.

• Expected Fluctuations: The expected fluctuations are calculated using the average standard deviation of the average return, which is also based on historical data.

• Visualisation: The graph displays three possible developments. The light blue line represents an optimistic scenario, the 95th percentile. There’s a 5% probability of achieving a value above this. The orange line symbolizes the expected scenario, namely the 50th percentile. The dark blue line represents a pessimistic scenario, the so-called 5th percentile. There’s a 95% probability of achieving a value above this line.

The early-start pension scheme provides that the state pays in €10 per month (up to €1,440 in total) for children between the ages of 6 and 18 — without any obligation to save. The capital is locked until retirement and has the potential to grow enormously.

Early withdrawal is possible, but leads to the loss of government subsidies. An exception applies when purchasing owner-occupied residential property (owner-occupied pension equivalent is still being clarified).

Practically every working person in Germany is entitled to it – employees, civil servants, and parents during child-rearing periods, and recently also the self-employed and freelancers. The latter only need to submit an annual tax return for this purpose.

The pension investment depot starts on 1 January 2027

Vor der Rente ist eine Auszahlung möglich, führt aber zur Rückzahlung aller staatlichen Förderungen und zur vollen Versteuerung der Gewinne (Ausnahme: selbstgenutztes Wohneigentum). Ab Rentenbeginn ist eine Komplettauszahlung ausgeschlossen, das Kapital wird monatlich ausgezahlt, wobei einmalig maximal 30 Prozent vorab steuerpflichtig entnommen werden können.