Free Consultation

Logo der InVertas
Letters forming Tax Refund and lots of money

42% Tax-refund with the Rürup-pension – How to save taxes with private pension plans in Germany

When you make over 60k a year, the Rürup-pension plan (also called Base pension) is very in­te­res­t­ing for you, because you can deduct 100% of the con­tri­bu­ti­ons from your income tax. 

Table of Contents 

High Income = High tax-refund

The reason that is so at­trac­ti­ve is that in Germany we have a pro­gres­si­ve tax system, that means the more you earn, the more tax you have to pay per­cen­ta­ge wise. Which means that ever­y­thing you make above 62k a year, you pay 42% tax on it. On the opposite side, that means, ever­y­thing you are able to deduct gives you a 42% tax refund. 

So let’s say you make 70k a year and invest 500€ a month/6k a year into a Ba­sepen­si­on, you will get back 2500€ from the go­vern­ment by writing one ad­di­tio­nal number in your tax de­cla­ra­ti­on. That means that you ef­fec­tively only pay 290€ in, but 500€ go into the in­vest­ment and compound and work for you. Of course, that is a huge advantage.

You can calculate how much tax you save with the income tax Cal­cu­la­tor from the German De­part­ment of Finance. The tax system works pro­gres­si­ve, that means, that the more income you have, the more tax you have to pay, not just in absolute numbers, but also per­cen­ta­ge wise. When you have put in your Gross income, the cal­cu­la­tor shows you how much income tax you pay in absolute numbers, as a per­cen­ta­ge of your overall salary and your marginal tax rate. The marginal tax rate ist the tax rate, you pay for the highest part of your salary. While you pay 0 income tax for the first 10k you make, you pay 42% taxes for for every euro you make above 62k. On the one hand it is not pleasant to pay that much tax on higher incomes, on the other hand that means, ever­y­thing you are able to deduct you get a tax refund with the same percentage. 

How big is my tax refund with the Rürup-pension?

Gross Income

Tax refund in %

Tax refund in € (5k contribution)













Livelong monthly pension

Together with this advantage come some things you should keep in mind: The Rürup-pension is a pension product, which means that you get paid out a monthly lifelong pension when you retire, not a lump sum. Most people looking to take care of their re­ti­re­ment want a monthly pension anyway, but it is important to know. This pension is stable, it can not decrease nor can it run out. 

Sticking with our example of investing 500€ a month into the Rürup-pension and starting out at 30 Years, you will have only from the base passion plan a pension 3k-5k in monthly lifelong pension, only from the base pension! After taxes, that’s 2.5k‑3.7k net in your pocket, for a 290€ net contribution.

Taxes on the pension

Very important: Taxes: Yes, the pension that you get when you retire you have to pay tax on, no social fees like on the go­vern­ment pension, just tax. For most people this will not be a high amount, because the taxable income in re­ti­re­ment for most people is lower, because the go­vern­ment pension is so low. In this case the pro­gres­si­ve tax system works for you because on the first 10k you get, you pay 0 income tax and also with 40k pension it is only 20% taxes. 

But let’s assume you have done a great job and have the same or even higher income when you retire and pay the same amount of taxes. Also then a base pension is very at­trac­ti­ve, because the go­vern­ment gives you liquidity for decades to work with. When we stick to our example with the 6k in­vest­ment a year, the go­vern­ment gives you 2500€ every year to work with over 30, 35 years.

When you invest that tax refund smartly, you will have far more money, multiples even,  solely from investing the tax refund than you will ever pay tax on the pension. This principle I explain in detail on the perfect pension plan, which you can learn more about in this article: The Perfect Pension Plan.

Das Bild zeigt einen Ausschnitt aus einem Versicherungsangebot mit möglichen Renten in Abhängigkeit der Wertentwicklungen

Limits on deduction

The second important tax im­pli­ca­ti­on is that the de­duc­tions are limited. The li­mi­ta­ti­on is as follows: Every in­di­vi­du­al can deduct 25.600€ minus the con­tri­bu­ti­ons toward the go­vern­ment pension. For example, when you make 60k a year your de­duc­ti­bi­li­ty is limited at 14.4k a year, when you make 70k it is limited at 12.6k a year and any income above 85k  it is limited at 9.9k a year. When you are married, you can add the two li­mi­ta­ti­on numbers.

The in­vest­ment in a Rürup-pension is freely choosable within the funds available at the insurance. The icing on the cake: There is no Capital Gains Tax on the in­vest­ment while you are contributing. 

One important note about fle­xi­bi­li­ty: The con­tri­bu­ti­ons to the Base pension are flexible, that means that you can increase or decrease your con­tri­bu­ti­on anytime. Ad­di­tio­nal­ly, you can get your pension anywhere in the world and enjoy re­ti­re­ment wherever you like. 




✅  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

When you want to see how the numbers on the Rürup-pension are for you in­di­vi­du­al­ly and what insurance company for the Rürup-pension is the best fit for you, then schedule a free initial con­sul­ta­ti­on with us and we as in­de­pen­dent brokers scan the whole market with the same con­di­ti­ons you get with the insurance directly and see what is the best solution for you.

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.