The Skinny on Voluntary Pension Contributions and Basic Pension in Germany
Spontaneous Donations Don't Qualify as Minimum Pension Amount - Contributions made voluntarily do not qualify as the standard pension entitlement.
Here's the lowdown on how voluntary pension contributions factor into calculating the basic pension in Germany. Buckle up, folks, it's about to get real.
It turns out that when determining the basic pension, only periods with mandatory insurance are taken into account. Voluntary pension contributions don't cut the mustard. This bombshell was dropped by the Federal Social Court (BSG) in Kassel after a 77-year-old pensioner from Baden-Württemberg took them to the cleaners. The guy had put in over 312 months of voluntary contributions while self-employed, but the German Pension Insurance gave him the cold shoulder.
The plaintiff argued that he should be entitled to a decent old-age security like compulsorily insured folks because he contributed greatly to the pension kitty. Unfortunately, the BSG wasn't buying it. The court reasoned that voluntary insurance and mandatory insurance have significant differences in statutory pension insurance. Voluntarily insured peeps can flex their contributions and even stop payments, unlike compulsorily insured individuals who can't wriggle out of their obligation.
The BSG claimed that it's perfectly acceptable for the legislator to treat compulsorily insured and voluntarily insured peeps differently in the pension game. The legislator's got a wide berth in this area, particularly when doling out goodies from federal funds meant for social equalization, such as the basic pension supplement.
So, who qualifies for the basic pension? An individual must hit the standard retirement age, have put in at least 33 years in the pension system (with allowances for childcare and caregiving duties), and earned less than 80% of the average income.
As of the end of 2023, around 1.27 million pensions nationwide received a basic pension supplement of an average of 92 euros. That's only about 4.9% of all pensions. Data for 2024 is yet to be released.
Now, you might be wondering about voluntary contributions under company pension schemes (Betriebliche Altersvorsorge; BAV). The specifics haven't been hashed out by the Federal Social Court, but voluntary contributions generally don't impact the basic pension calculation, which focuses on statutory contributions.
For a more detailed breakdown of the ins and outs of Germany's basic pension scheme, check out the enrichment data.
In this context, voluntary pension contributions made in company pension schemes, also known as Betriebliche Altersvorsorge (BAV), do not influence the calculation of the basic pension, contrary to one's expectations. Additionally, the discussion about industry, finance, business, and personal-finance is less relevant in this text, as it primarily focuses on pension-related matters.
