Free Consultation

Logo der InVertas
Open Laptop with a document called retirement planning

Private Pension Plans in Germany: All go­vern­ment benefits explained

When it comes to planning for your re­ti­re­ment in Germany, there are a variety of options available to you. The German go­vern­ment offers si­gni­fi­cant benefits in private pension plans when you save for your re­ti­re­ment, and these benefits are organized into three different brackets, each with its own ad­van­ta­ges and di­s­ad­van­ta­ges. In this article, we will give you an overview of the three levels of pension plans available, so you can decide which one is best for you.

Table of Contents 

Private Pension Level 1: High Income = High tax-refund

The private pension plan on Level Number One is the so-called Ba­sepen­si­on or Rürup-Pension. This is a private pension plan, where the con­tri­bu­ti­ons are 100% de­duc­ti­ble from your income tax, which is a huge advantage, because you get 42–48% of your con­tri­bu­ti­on back, when you make over 62k a year. It is a pension product, that means that the money is not available until you retire, then you get paid out a monthly lifelong pension that can not decrease or run out. The Base pension is mainly in­te­res­t­ing for in­di­vi­du­als with a high income, because they get massive tax refunds, have high interest and a high pension. You can read more about the Ba­sepen­si­on here: Tax-refund with the Ba­sepen­si­on.


✅  high tax refunds up to 48%

✅  free fund selection without capital gains-taxes

✅  high interest in­vest­ment choosable

✅  up to 26.528€/year deductible


❌  money is not available until retirement

❌  taxes on the pension (taxes in pension are lower)

❌  no one-time payout available

Private Pension Level 2: Riester and company pension


Riester Pension Plan:

Level Number two includes two pension plans: The Riester pension and the company pension. The Riester pension is not at­trac­ti­ve for the majority of people because of its low interest and in­fle­xi­ble structure. 


✅  tax-de­duc­ti­ble

✅  bonuses for families


❌  very low interest

❌  bonuses are deducted form tax advantage

❌  taxes on the pension

❌  high cost

❌  view providers

Company Pension Plan:

However, whether a company pension is worth it depends on your em­ploy­er’s offering. Some employers only offer one plan, while others leave the choice up to their employees. When you have the freedom to choose your plan, it can be a very at­trac­ti­ve option as it allows you to convert a part of your salary before taxes and social fees, and your employer gives you a bonus on top.


✅  tax-de­duc­ti­ble

✅  social-fees de­duc­ti­ble up to 292€ per month

✅  employer bonus

✅  lump-sum payout possible


❌  low interest in most plans

❌  highly dependent on employer

❌  new cost with every job change

❌  taxes and social fees on payout

Private Pension Level 3: Flexible Pension Plan

The pension plan on level three is also called the flexible pension, because it offers a lot of fle­xi­bi­li­ty. Unlike the Base Pension, you can take your money out anytime, and when you retire, you can choose whether you want the lifelong pension or the payout at once. The go­vern­ment also offers huge tax benefits, such as 0% capital gains tax on your in­vest­ment while the money is in the plan and low taxes on the payout when you retire. You can read more about the Flexible Pension here: The Flexible Pension Plan.


✅  free fund selection without capital-gains-taxes

✅  tax ad­van­ta­ges on payout

✅  lump-sum payout or livelong monthly pension choosable


❌  no immediate tax advantages

❌  higher cost than a broker account

❌  only pro­fi­ta­ble long-term


So this is an overview over the different pension options available. In general, you can say that for most people either the Ba­sepen­si­on and the flexible pension are very in­te­res­t­ing or what I call the perfect pension plan, which is a com­bi­na­ti­on of both. You can read more about the Perfect Pension Plan here: The perfect pension plan.

Of course, in an in­di­vi­du­al con­sul­ta­ti­on we help you figure out what plan fits you best, answer the questions you might have and give you our re­com­men­da­ti­on for your in­di­vi­du­al situation.

About the Author

David Reinhard Profilbild

David Reinhard

Senior Consultant 
David is our expert for English-speaking customers as well as US citizens. He helps customers un­der­stand and make the best use of the German system. 

Similar Posts

Take care of your future today

We help you to clarify the complex facts and show you your investment options. Get to know us in a free initial consultation!

Opinions of our

Our passion is to give you a professional good feeling. Always honest and transparent. Convince yourself with our numerous reviews!

Vanessa Kuenzel


Among other things, I asked for a pension plan there and I am really positively impressed by the consultant. He responded very well to my wishes and was and is really always available for me! For my questions he has always taken a lot of time and also very much patience and friendliness! The product recommended by him I had compared with others and finally decided for this. On the one hand, because the product really convinced me in the end and on the other hand, because the consultant David R. really took the time and explained everything to me again and again in a very understandable and good way. Great consultant who really does not leave you hanging!

Anke Schneider


Many thanks to Mr. David Reinhard for the detailed advice and patience in answering my questions - sympathetic and competent!

Lukas Prechtl


Super good financial service from David Reinhard! The advice is based on your own needs and interests and not on the interests of the respective insurance companies / banks.

Pascal Stock


The advice given by Mr. Reinhard when changing the Riester pension was professionally very good, fast and even via video telephony uncomplicated and possible at any time. Therefore, I can highly recommend this.

Faisal Anees


It was nice being supported with a professional representative - ( David Reinhard ) who advised and gave us the best suited and transparent advise. This not only gave us the confidence but also motivated us to start with our goal.



David Reinhard has the patience and knows the details. He gives the time that is needed for the advice and is really good in what he does. He came across as someone who does his best to win the trust and confidence.