As an expatriate, you have surely already heard of Riester and Rürup for retirement planning. The Riester-Rente and Rürup-Rente are two forms of state-subsidized private pension schemes.
The objective of these two schemes is to supplement the statutory pension, which is clearly not sufficient to live on. These two schemes operate differently and address specific needs.
As an expatriate, the choice depends on several factors: professional situation, family situation, and financial goals. Here is a comparison to help you make the best decision.
1. The Rürup-Rente (Tax-Deductible Pension)
The Rürup-Rente, also known as “Basis Rente”, is subsidized exclusively by tax benefits. It is aimed at anyone paying taxes: employees, self-employed individuals, liberal professions, entrepreneurs, etc.
The Rürup pension is particularly attractive due to its tax advantages. Contributions to this pension are deducted from taxable income, providing tax relief. Contributions are capped at a maximum amount, and withdrawals can be made from age 62 in the form of a lifelong annuity.
Contributions to the Rürup plan are deductible up to €27,566 for a single person and €53,131 for a married couple (2024 amounts, adjusted annually). This plan is therefore particularly attractive for those with high incomes looking to maximize their tax savings.
Another aspect of this scheme is that the pension can only be paid as a lifelong monthly annuity. You cannot access or transfer the money during the savings phase.
Finally, the Rürup plan can be invested in investment funds, offering potentially higher returns than the Riester plan, but with the risk of fluctuations.
2. The Riester-Rente
To fully benefit from this subsidy, at least 4% of gross income, after deducting allowances, must be paid into the contract annually during the payment phase. The minimum contribution must be €60 and a maximum of €2,100 per year.
With this pension, you primarily benefit from annual state allowances, which amount to €175 for the saver and up to €300 for children. The Riester-Rente is therefore also attractive for families with children, but also for single individuals or those with low incomes.
The Riester-Rente pension can be accessed from age 62. Payments are 100% taxable at the individual income tax rate. However, savers can also have up to 30% of the capital paid out as an immediate annuity, which is also taxable as income.
Another aspect of the Riester pension is its flexibility. The saved capital can also be used to purchase real estate for your own use. Amounts saved with a Riester-Rente contract are also protected in case of recourse to Hartz IV social benefits and can be passed on to heirs.
Finally, the funds invested in the Riester-Rente are guaranteed, making it a safe choice for cautious investors. However, this security limits the return potential.
Good to know: expatriates should, however, be vigilant, as leaving the European Union before retirement could lead to the loss of public subsidies.
3. Comparison between Riester and Rürup: Which Plan to Choose?
| Critères de choix | Plan Riester | Plan Rürup |
|---|---|---|
| Profil | Familles nombreuses et faibles revenus | Toute personne payant des impôts |
| Avantages fiscaux | Allocation et déduction jusqu’à 2 100 € | Déduction jusqu’à 27 566 € (célibataire) et 55 131 € (couple marié) |
| Sécurité du capital | Capital garanti | Investissements possibles en actions |
| Versement de la retraite | Rente et option de versement partiel | Rente à vie |
| Conditions de résidence | Optimal si vous résidez en Allemagne | Avantageux même pour les non-résidents |
4. What criteria to consider for French expatriates?
- Lowering your taxable base to receive “Elterngeld”.
- Investment and return flexibility: profiles with a higher risk tolerance and seeking better returns might prefer the Rürup plan, which offers more flexible investment options.
Conclusion
These two schemes will allow you to benefit from the best tax options available in Germany. It is advisable to be accompanied by an advisor to structure solutions tailored to your household.