The advantages at Riester are particularly evident in the state allowances, one of which is the child allowance. But what is particularly important to consider with this type of retirement provision and what are the exact rules??
Fundamentals of the Riester contract
A Riester contract is particularly worthwhile for families with children. The state’s high child allowance makes private pension provision easier. Even if the Riester funding is criticized by some citizens, it is worthwhile to calculate this form of savings carefully. You should take into account both the allowances themselves and the tax benefits.
The following points should be noted in this context:
- For children born in or after 2008, an annual child allowance of 300 euros applies,
- a child allowance of 185 euros applies to children born in or after 2007,
- the basic allowance per year and person was 154 euros until 2017 and was increased to 175 euros in 2018.
The contributions paid for the Riester savings contract are tax deductible. How high the tax benefit actually is depends on the level of the individual tax rate. Post-taxation applies to the Riester pension. This means that you only have to pay taxes during the payment phase.
Riester pension Neu Isenburg: make optimal use of state allowances !
Requirements for the child allowance
The Riester savers do not always receive the full allowance. You are only entitled to the full child allowance if the full minimum contribution is paid. With a lower deposit, however, the allowance amount is reduced accordingly.
The child allowance is only paid after a formal application has been made. The Riester provider takes care of this task. A single application is sufficient for the entire term. The application for the Riester allowances can be submitted two years later. The entitlement to funding will only expire after this period. If the claim expires due to changes in the personal situation, the insurer must be informed.
Who receives the child allowance?
As a rule, the mother receives the financial support that ends up in the corresponding Riester account. The funding is transferred to the person who receives the child benefit. The subsidy is only paid to the father’s account if the application is made jointly. This form of application always has a one-year period. No revocation is foreseen within the year in question.
If the parents are separated or if the money is to be transferred to the other parent for another reason, a new application is due. Exactly how to do this is explained in more detail below. In addition, the savers concerned can find out from their adviser or other experts for old-age provision which details have to be observed.
The precautionary situation for transfer / new application
When transferring the child allowance from the mother to the child’s father, the AV declaration is required for the tax return. The father enters the number of children for whom he receives the child allowance. The application for an allowance from the Riester insurer must also be adjusted accordingly.
If the parents do not live together, the parent who receives the child benefit receives the child allowance. At a A change in the entitlement to payment must be checked to see who received child benefit at the beginning of the year. If only one of the partners has an indirect claim to the Riester funding, it is advisable for the non-beneficiary to take out their own pension. Otherwise he has no claim to the allowance. If there is a divorce, it is even possible to lose the funding. For the partner with an indirect, i.e. not direct claim, a contribution of only € 5 applies.
When transferring the child allowance from the mother to the child’s father, the AV declaration is required for the tax return. (# 01)
Entitlement to child benefit and child allowance
You must have received child benefit for at least one month in the calendar year in order to be entitled to the child allowance. The entitlement therefore depends on when the child is entitled to child benefit. In general, eligibility for funding ends either with the Start of training or at the end of the 25th year of life.
The amount of child benefit is graded as follows:
- For a child there is € 184,
- two children are entitled to € 364,
- for three children the child benefit is € 558.
Further information and calculation bases can be obtained from insurers and banks as well as from the independent information portals on the Internet.
The child allowance: possible conflicts and special details
For high earners, it makes sense to apply for the full allowance. (# 02)
For high earners, it makes sense to apply for the full allowance. However, there can be difficulties in certain phases, for example when the mother is taking parental leave. This not only reduces the current income, but also the mother’s future pension.
A clever combination of Riester contract, own contribution and the allowances helps to secure the future and at the same time keep the contributions in the moderate range. When calculating, you should keep an eye on the saver’s allowance and also consider other possible risks. If you pay less than the contractually stipulated minimum contribution, the state subsidies decrease and you cannot use the full potential of the Riester system.
Find the right shape at Riester
There are various Riester forms that savers can choose between, for example:
- The classic Riester pension,
- the Riester fund savings plan,
- Home Pensions.
In order to receive the full state subsidies, 4% of the pensionable income must be paid into the contract, regardless of which form you choose.
It may also be worthwhile for the partner to sign a Riester contract. If the spouse does not pay his own pension insurance contributions, he has the option to join in for 60 euros a year and receive the full amount of the allowance.
The experts advise this, that the child allowance is requested by the partner who has a lower income. The paid-in Riester contributions are later entered in the tax return (Annex AV) and reduce the tax burden.
Riester pension – The biggest misunderstandings
Application and deadline: important points at Riester
In order to receive the Riester allowances, savers have to meet certain deadlines. In principle, it is possible to submit the application retrospectively for up to two years. If you have not yet applied for the allowance for 2016, this can still be done by the end of 2018. In this case, the last possible time would be December 31, 2018.
The original application must be received by the insurer, so it cannot be sent online. To ensure that the important document is not lost, you should make a copy for yourself and send the application by registered post.
In order to avoid inquiries and problems when applying for the child allowance, you should fill out everything cleanly and not forget any information.
The following numbers are particularly important as they make it easier for the processors to assign them:
- The tax number (can be found on the annual tax assessment),
- the ID number (it is on the income tax card),
- the social security number (can be found on the social security card).
Photo credits: © Shutterstock cover: Tom Wang, # 01: WAYHOME studio, # 02: Roman Samborskyi
Marius Beilhammer, born in 1969, studied journalism in Bamberg. He has been writing for technical magazines for many years, and also as a freelance writer on a wide range of market and business topics. As a Franconian cheerful nature, he always finds the balance between lightness and extensive know-how through his pronounced affinity for technology.
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