Rürup

Tax Advantages

The Rürup pension offers attractive tax benefits, making it particularly appealing for self-employed individuals and high-earning employees. Contributions made to the Rürup pension are tax-deductible, meaning individuals can deduct the contributions from their taxable income, resulting in potential tax savings during their working years.

Long-Term Savings

Rürup is designed as a long-term savings vehicle, primarily intended for retirement. The contributions made into the Rürup pension accumulate over time, and the resulting pension payments typically begin after reaching the statutory retirement age. Early withdrawals are generally not permitted without incurring significant penalties.

Guaranteed Lifetime Payments

Rürup pension plans provide a guaranteed lifetime pension, ensuring that policyholders receive regular income throughout their retirement years. The amount of the pension is based on the total contributions made, the investment performance of the funds, and life expectancy.

Creditor Protection

Rürup pensions offer a certain degree of creditor protection, which means that in case of financial difficulties or insolvency, the accrued assets in the Rürup pension are safeguarded from being seized by creditors.

Limitations on Flexibility

Unlike some other retirement savings options, such as private pension plans or the Riester pension, Rürup pensions generally lack flexibility. Contributions are inflexible and must be paid regularly, with limitations on contribution adjustments or breaks.

No Lump-Sum Payment

One distinctive feature of the Rürup pension is that it typically does not offer a lump-sum payment option. Instead, policyholders receive a monthly pension throughout their retirement.

It’s important to note that Rürup pension contributions and benefits are subject to certain legal limits, which may vary based on the individual’s age and the year of the contract. Additionally, contributions to Rürup pensions are not tax-free; they are only tax-deductible, and the pension payments received during retirement are subject to taxation.

The Rürup pension is particularly popular among self-employed individuals, freelancers, and high-earning employees seeking tax-efficient retirement planning options. However, it may not be the best choice for everyone, and individuals should carefully consider their individual financial situation and retirement goals before opting for a Rürup pension. Seeking advice from financial advisors or tax professionals can help individuals make informed decisions about their retirement planning and choose the most suitable pension scheme for their needs.