TRANSPARENTA launches innovative pension model
The stepped reirement pension is a new form that retirement benefits to be received as a pension. And this is how it works:
The first level consists of the life-long old-age pension, which covers the statutory minimum benefits. The second stage is a pension that is paid out for 20 years and whose residual value is paid out to survivors in the event of death. The third level works analogously to the second, but the payout period is 10 years, which results in a higher monthly pension.
At the time of retirement, all parts of the pension are fixed as binding. The total old-age pension is therefore derived from the pension components for up to three levels:
- Lifelong pension, which is extended beyond all levels and must include the statutory minimum benefit;
- Continuing part of the second-level pension, which is paid out until the 20th pension reference year is completed;
- Continuing pension portion of the third stage, which is paid out by the end of the 10th pension reference year.
The insured person is free to determine how the saved retirement capital is divided between the three pension levels. This is subject to the proviso that the lifetime pension portion of the first level must be at least the same as the statutory minimum pension (BVG minimum).
The second and third level pension components are financed from supercompulsory retirement assets, including an annual interest rate equal to TRANSPARENTA's technical interest rate. This is currently 2.0%. In order for the phased pension model to be implemented, the supermandatory share of total retirement assets should amount to more than a third. This is so that the pension shares of levels 2 and 3 reach a reasonable level.
What is the big advantage?
If a recipient of the stepped retirement pension dies before the end of the 10th or 20th pension reference year, the residual value of the fixed-term pension components is paid to the regulatory beneficiaries. In the case of pension recipients without a spouse, children, parents or siblings therefore also receive the unpaid pension portions of levels 2 and 3 as death benefit.
For the life-long pension portion of level 1, the beneficiary spouse/partner pension of 60% is normally insured (with the option to increase the entitlement to 80% or 100%).
Who is this attractive for?
The stepped retirement pension is particularly interesting for insured persons
- whose income requirements are higher at the start of their retirement life than afterwards; and
- who want increased capital protection for survivors in the event of death.
Interested? Detailed information can be found in regulations as well as in our fact sheet (in German).