from the Euro am Sonntag editorial team
You have often reported that employees who have been made redundant can pay their severance pay into a credit balance with the statutory pension insurance system in order to save on taxes and to ensure that they can retire without deductions. I expect a corresponding payment for the loss of my job soon. Where can I get solid information about the details for an optimal deposit?
uro on Sunday: The best way to check whether a severance payment can be converted into a credit balance with the pension fund is to contact the insurance company concerned. In each specific case, it always depends on what the employee receives compensation for – and which claims are to be settled with it. If preferential and non-preferential compensation claims coincide, the payment can also be split. The severance payment for the loss of a job can be paid out with reduced tax (“fifth rule”), the “false severance payment” then goes gross for net without tax deductions directly into the value credit and finances the bridge to retirement. However, the later monthly salary payments from the German pension insurance scheme until retirement age are subject to the normal income tax deduction – the reduced taxation according to the five-fold rule does not apply here.
In addition, the Federal Ministry of Labor and Social Affairs has a brochure on the subject available for download on its website (www.bmas.de, under publications: “Wertguthaben – Frequently Asked Questions”). The answer to “Question 7” is decisive. According to this, in addition to salary components that are subject to social security contributions and time credits from flextime or flexitime accounts, severance payments can also be transferred to a credit balance.
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