Finally, time to cash in! That's fantastic!

Fortunately, you can and must make this decision only when your retirement benefits become payable. The standard option here is to receive payments in the form of a pension, which you will receive for life, regardless of your age. If you prefer a one-time capital payment instead, you must request this before the pension begins. The insurance company will notify you in advance. The advantage of the pension is that you don't have to worry about how long you will live and whether your money will last. This advantage increases the healthier and older you are. Another advantage of the pension is that, due to the many small installments, you usually have significantly fewer deductions for taxes and social security contributions compared to a one-time capital payment. On the other hand, the one-time capital payment allows you to make larger purchases or use it, for example, to repay a mortgage, and in the event of death, the money is freely inheritable. If you are expecting large payout amounts, we recommend seeking the advice of a tax advisor in the year of payment.

One more tip: If you find the decision very difficult, in many cases, the insurance company will offer you the option, upon request, to receive 30% of the contract value as a one-time capital payment and 70% as a lifelong pension.

The benefits from your company pension scheme are taxable as other income in accordance with Section 22 No. 5 EStG if and to the extent that the contributions were tax-free for you during the savings phase. This regularly applies to contributions paid via your employer. The amount of tax you pay depends on various factors such as the payout format (lump sum or pension payment), your marital status and the amount of other income. You receive your payout directly from the pension provider (insurer) without deduction of tax. The pension provider reports the payout to the tax office and the tax is then levied as part of your income tax return.

If your payout comes from a direct insurance policy that started before 2005, special rules apply.

Our tip:

• If you would like a one-off lump-sum payment, please check whether the original insurance policy is with you or your employer and request it in good time. The policy is required when it comes to organising the payout.
• If you cannot find the original insurance policy, you have the option of submitting a declaration of loss. In this case, please contact us at service@pension-services.de and include your contract number. We will get back to you.
• If you can look forward to large payout amounts, we recommend that you seek the advice of a tax advisor in the year of the payout.
• Please note that the insurer will need information from you when paying out the insurance benefit. These are the 11-digit tax ID, usually also the 12-digit national insurance number, the bank details for the payout, the health insurance details and, in the case of pension payments, possibly also proof of birth certificate if there are children - This is important because of the contributions to statutory long-term care insurance.

• The payment is made at retirement age at the time specified in your contract documents. In addition to the regular end of the contract, a drawdown phase of several years may also be specified there. Within a drawdown phase, you can flexibly move the payout date forwards or backwards on request.
• If you have already received a pension notification from the statutory pension insurance fund and would like to bring forward the payment of your company pension to your retirement date, this is possible. Please send us your pension notification as early as possible. Please note that the value of the contract is usually lower if you pay out early.
• If your company pension is due for payment and you are still employed after this date, this does not prevent a payout. At your request, we can also ask the insurance company whether the term of your contract can be extended.