Discount-free early retirement: extra contributions are becoming increasingly popular

Work through 67? For many people, that is out of the question. But if you want to retire earlier, you have to accept discounts. An early alternative is to make special contributions to the pension fund. They are becoming more and more popular.

More and more citizens are paying extra contributions to the pension fund, so that they can retire earlier without discounts, Between 2017 and 2018, the number of insured who compensated for later pension reductions with special contributions rose by 50 percent, reports the “Süddeutsche Zeitung”, citing an analysis by the German Pension Insurance (DRV).

Because of these special contributions, more and more money is flowing into the pension fund. In 2017, the income from the extra payments according to “Süddeutscher” was 207 million euros, in 2018 it was already 291 million. No figures are available for 2019.

On average, the payers of voluntary special contributions paid slightly more than 17,000 euros per person to the pension fund in 2018. A DRV spokeswoman saw this as “a sign of the trust of the contributors in the security of the statutory pension”.

In 2018, 23 percent of all retirees retired early with discounts, the newspaper further cited from the DRV analysis. They accepted an average discount of 90 euros from the gross monthly pension. Basically, for every month that the pension payment starts earlier, 0.3 percent is deducted from the pension amount, and for a lifetime.

Compensating for such pension reductions is expensive and can cost several 10,000 euros in total. However, the extra payments can be spread over several years. The Flexirentengesetz has enabled insured persons to compensate for pension reductions from the age of 50 with voluntary contributions since July 1, 2017.

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