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Three-tier model of retirement provision
VersicherungErwachsene
Germany's retirement system: tier 1 (statutory pension, Rürup pension), tier 2 (company pensions, Riester), tier 3 (private provision, ETFs, life insurance).
The German retirement provision system is based on three tiers:
Tier 1 – basic provision:
• Statutory pension insurance
• Rürup pension (basic pension)
For tax purposes: contributions fully deductible, the pension is taxed
Tier 2 – supplementary provision:
• Company pension scheme
• Riester pension
For tax purposes: allowances and/or tax benefits during the savings phase
Tier 3 – investments:
• ETF savings plan, shares
• Private pension insurance
• Endowment life insurance
For tax purposes: from income that has already been taxed, but returns are taxed favourably
Did you know? Tier 1 (statutory pension) is mandatory, tier 2 (Riester/company pension) is subsidised, tier 3 (ETFs/private) is flexible. Most Germans only have tier 1.
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