Your future. Financially secure.
Discover Nextsure's private pension plan: your flexible and secure solution for a worry-free future and financial independence in retirement. Find out more now and prepare individually.
Lifetime guaranteed pension
Flexible contribution design possible
Take advantage of attractive tax benefits
What is a private pension insurance and how does it work?
Building capital for retirement
Payment as a pension or capital
Individual Contract Design
Supplement to the statutory pension
The functioning of private pension insurance in detail
Private pension insurance is a fundamental component of individual retirement planning, designed to bridge the gap that often arises between your last employment income and the state pension. The principle is simple: over an extended period, usually many years or decades, you regularly pay contributions into your contract. These contributions are invested by the insurance company to build capital. Depending on the type of contract, the funds can be invested conservatively with guaranteed interest or more opportunity-oriented in funds. Ideally, during the accumulation phase, you benefit from interest and compound interest effects that increase your accumulated capital. By the agreed pension start date, you typically have a choice: you can opt to receive the accumulated capital as a lifetime monthly pension or choose a one-off lump sum payment. Some plans also offer a combination of both. The amount of the future pension depends on several factors, including the amount and duration of your contributions, the return achieved on the investments, and the pension factors guaranteed in the contract. Modern private pension insurances often offer high flexibility regarding contribution adjustments, additional payments, or withdrawals to adapt to changing life situations. It is crucial to select a plan that matches your financial goals and risk tolerance to optimally prepare for your retirement. nextsure helps you find the right solution.
Your retirement plan
Private Pension: Building Blocks for Your Future
Guaranteed Pension
Lifetime financial security through guaranteed payments.
Flexibility
Contributions, term, and payout adaptable.
Capital selection
Choose a pension or a one-time lump sum payment.
Tax advantages
Benefit from tax advantages during the accumulation and payout phases.
Investment fund
Higher returns potential through investment in funds.
Protect heirs
Financial security for your loved ones in the event of death.
Co-payments
Increase your pension capital flexibly.
Contribution guarantee
Security for your paid contributions (dependent on the tariff).
Digital Administration
Easy online access to your contract.
Discover the diverse ways to secure your financial independence in retirement.
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Your worry-free retirement?
What types of private pension insurance are there? (Classic, Unit-linked, Hybrid)
In private pension insurance, there are various investment forms that differ significantly in their return prospects and level of security. The **traditional pension insurance** focuses on security: your contributions are invested conservatively, and you receive a guaranteed minimum interest rate as well as a guaranteed minimum pension. In addition, you benefit from surplus participation, although the amount is not guaranteed. This variant is suitable for security-oriented savers. In contrast, there is the **unit-linked pension insurance**. Here, your contributions go into investment funds, which you can often select yourself or choose from a portfolio. This offers higher return prospects but also carries the risk of price fluctuations. There is not always a guarantee on the contributions made or a minimum pension, although many modern tariffs offer contribution guarantees at certain times. This form is ideal for opportunity-oriented investors with a long investment horizon. A middle ground is provided by the **hybrid pension insurance**. It combines elements of both the traditional and the unit-linked versions. Part of your contributions is invested security-oriented (often with guarantees), while the other part is more opportunistically invested in funds. In this way, you can benefit from return opportunities, while a certain level of security is maintained. Choosing the right type depends heavily on your personal risk tolerance, return expectations, and investment horizon. Therefore, a careful analysis of your needs is essential.
Who particularly benefits from a private pension insurance?
A private pension insurance is generally a worthwhile option for almost every adult citizen in Germany to actively shape their own retirement planning and close the expected gap in the statutory pension. However, it is particularly recommended for certain groups of people. **Employees** who realise that the statutory pension alone will not suffice for the accustomed standard of living in retirement will find it a solid supplement. **Self-employed and freelancers**, who often pay little or nothing into the statutory pension insurance, can build an important pillar of their retirement provision with private pension insurance. It is particularly attractive for **young people and career starters**, as they can achieve a respectable additional pension with relatively low contributions due to an early start and long terms, and benefit maximally from compound interest. **Families** can use it not only to plan for their own retirement but often also to provide for dependants. For **high earners**, whose income exceeds the contribution assessment ceiling of the statutory pension insurance, private provision is a must to secure their standard of living. Ultimately, anyone who wishes to be financially independent in old age and not solely reliant on state benefits is well-advised with a private pension insurance. The flexible design of modern products allows adjustment to individual life phases and needs.
Tax Advantages of Private Pension Insurance: What You Need to Know
The private pension insurance offers attractive tax advantages that may vary depending on the phase – savings phase or payout phase – and the type of contract. During the **savings phase**, the income from capital investments within the insurance wrapper is generally exempt from capital gains tax, provided there is no harmful early disposal. This means that interest, dividends, and capital gains generated within the contract do not need to be taxed annually, which favours the compound interest effect. In certain certified pension schemes like the Riester pension or the Rürup pension (basic pension), the contributions paid can also be claimed as special expenses for tax purposes, leading to a direct tax saving during the earning phase. In the **payout phase**, taxation heavily depends on the chosen payout form. If you opt for a **lifetime annuity**, only the so-called earnings portion is taxed. This is legally determined and depends on the age at the start of the pension. The later the pension begins, the lower the taxable earnings portion. For example, if the pension begins at 67 years, the earnings portion is only 17% of the pension. This small portion is then subject to your personal income tax rate. If you choose a **one-time capital payout** for contracts concluded after 2004 that meet certain conditions (minimum term of 12 years, payout from the age of 62), half of the earnings are tax-free (half-income procedure). The other half is taxed at your personal income tax rate. These tax regulations make private pension insurance an efficient tool for long-term asset accumulation and retirement provision.
Investment opportunities and guarantees: What can you expect?
The return prospects and guarantees of a private pension plan can vary significantly depending on the type of product chosen. For **traditional pension plans**, security is the main focus. They offer a guaranteed minimum interest rate on the savings portion of your contributions, which is currently relatively low due to the low-interest environment. In addition, there are profit participations, which depend on the insurer’s investment policy and are not guaranteed. The return is generally modest, but very secure and predictable. On the other hand, **unit-linked pension plans** offer significantly higher return potential, as your contributions are invested in investment funds. The performance directly depends on the selected funds. Long-term, above-average returns can be achieved here, though fluctuations in value and losses are also possible. Guarantees are rarer with pure fund policies or often only relate to preserving the contributions paid by the end of the term. **Hybrid models** aim to combine the best of both worlds: they often provide a contribution guarantee while also offering the opportunity for higher returns through investment of part of the contributions in a fund. The expected return strongly depends on the chosen investment strategy, fund selection, contract term, and incurred costs. It is important to realistically assess one's own return goals and risk tolerance and choose the product accordingly. Transparent information on costs and past performance is essential for making an informed decision. nextsure supports you in comparing the return potentials of various offers.
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Flexibility in private pension schemes: Adapting to life stages
Modern private pension insurance products are characterised by a high degree of flexibility, allowing the contract to be adjusted to changing life circumstances. This flexibility is a significant advantage over rigid savings forms. One of the most important flexibility options is **premium adjustment**: In many policies, you can increase your premiums, for example, if you receive a salary increase, or reduce them or suspend them temporarily (premium exemption) in case of financial difficulties. **Additional payments** are often possible as well, enabling one-time income, such as an inheritance or bonus, to be used profitably for retirement savings. Withdrawals of capital **before the actual retirement begins** may also be provided in some contract models, such as for larger purchases or unforeseen expenses, although the contractual terms and potential tax implications must be considered here. Furthermore, many policies offer flexibility regarding the **start of the pension**. Often, the point from which the pension is paid can be brought forward or deferred within certain limits. Additionally, the **choice of payout option** (lifetime pension, lump-sum capital payment, or a combination) at the end of the accumulation phase offers important design possibilities. With unit-linked policies, there is often the option to adjust the **investment strategy** during the term, for example, by shifting between different funds (shifting and switching) or by activating an end-of-term management strategy that invests the capital more conservatively towards the end of the term. These features of flexibility make private pension insurance an adaptable companion across various life stages.
Important criteria for choosing the right plan
Choosing the right tariff for your private pension insurance is a decision with long-term implications. Therefore, you should carefully consider various criteria. A key aspect is the **cost of the contract**. Look for transparent information regarding acquisition and administrative costs, as well as investment costs, since these can significantly reduce the net return. Compare the effective costs of different offers. The **return opportunities and guarantees** are also crucial: Does the tariff's risk-return profile match your personal investment mentality? Do you prefer security with guarantees or higher return opportunities with corresponding risks? The **flexibility of the contract** (see previous section) is another important criterion. Check to what extent adjustments to contributions, additional payments, withdrawals, or changes to the start of the pension are possible. The **financial strength and creditworthiness of the insurer** provide insight into the long-term security of your investment. Consult ratings from independent agencies. For unit-linked policies, the **quality and selection of the available funds** is relevant. Is there a wide selection of high-performing funds from various asset classes? Are sustainable investment options (ESG criteria) available? Finally, the **conditions for the payout phase** are important: What options are available (annuity, capital, combination)? What is the guaranteed annuity factor, or how is it calculated? Also clarify the rules regarding **survivor protection**. Comprehensive advice that takes into account your individual situation is essential to find the optimal tariff.
The role of the pension factor and what it means for your retirement
The annuity factor is one of the most important key figures in private pension insurance, especially in unit-linked and newer classic policies, as it determines how much monthly pension you will receive per €10,000 saved capital at the start of retirement. For example, if the annuity factor is 30, you will receive a monthly pension of €30 for every €10,000 capital in your contract. Therefore, if you have accumulated €100,000, the monthly pension would amount to €300. There are **guaranteed and projected annuity factors**. The guaranteed annuity factor is assured to you when you conclude the contract and must not be undercut by the insurer, even if life expectancy generally increases or capital markets perform poorly. It thus offers important planning security. The projected annuity factor additionally includes possible surpluses and is therefore usually higher than the guaranteed one, but it is not certain. Insurers can adjust the non-guaranteed annuity factor mentioned at the time of the contract conclusion at the start of retirement, based on the then current actuarial assumptions (e.g., life expectancy, interest rate levels). Therefore, when choosing a tariff, pay particular attention to the level of the **guaranteed annuity factor**. A higher guaranteed annuity factor means a higher guaranteed pension with the same capital. Some tariffs also offer a so-called "annuity factor guarantee with trustee clause", where the once guaranteed factor may only be adjusted under certain, strict conditions and with the consent of an independent trustee. Critically compare the annuity factors of different providers, as they have a direct impact on your financial provision in old age.
When does it make sense to have a private pension insurance?
At nextsure, we place the utmost importance on enabling you to make transparent and informed comparisons of private pension insurances, so you can make the optimal decision for your individual needs. Our focus is on several key factors. Firstly, we analyse the **cost structure** of the tariffs very precisely. This includes not only the obvious upfront and administration costs but also the internal fund costs in unit-linked policies. We show you how these costs can affect your net return. Another crucial point is **flexibility**. We examine what adjustment options the contracts offer – from contribution changes to additional payments and withdrawals, to arranging the start of the pension. Because your life is not static, and neither should your retirement provision be. The **return opportunities and security level** are also examined in detail. We present the different investment concepts (conventional, unit-linked, hybrid) clearly and highlight the respective opportunities and risks. For unit-linked products, we pay attention to a high-quality fund selection and the possibility to adjust the investment strategy. The **guaranteed pension factor** is a decisive criterion for us for the planning of your future pension. We make it clear what guarantees the respective tariff offers. In addition, we take into account the **financial strength and service quality of the provider**. Long-term security and a reliable partner are essential for retirement provision. Our goal is to offer you not just a pure price comparison, but a comprehensive evaluation that helps you find the most sustainable solution for your private pension plan – digital, clear and tailored to your goals.
