Factsheet on stepped retirement pensions

This is how the stepped retirement pension works:

The first level consists of the life-long old-age pension, which covers the statutory minimum benefits. The second stage is a pension that is paid out for 20 years and whose residual value is paid out to survivors in the event of death. The third level works analogously to the second, but the payout period is 10 years, which results in a higher monthly pension.

At the time of retirement, all parts of the pension are fixed as binding. The total old-age pension is therefore derived from the pension components for up to three levels:

1. Lifelong pension share, which is extended beyond all levels and must include the statutory minimum benefit (BVG minimum);
2. Continuing part of the second-level pension, which is paid out until the 20th pension reference year is completed;
3. Continuing pension portion of the third stage, which is paid out by the end of the 10th pension reference year.

You are free to determine the distribution of the saved retirement capital between the three pension levels. This is subject to the proviso that the lifetime pension portion of the first level must be at least the same as the statutory minimum pension (BVG minimum).

The second and third level pension components are financed from supercompulsory retirement assets, including an annual interest rate equal to TRANSPARENTA's technical interest rate. This is currently 2.0%. In order for the stepped pension model to be implemented, the supermandatory share of total retirement assets should amount to more than a third. This is so that the pension shares of levels 2 and 3 reach a reasonable level.

‍What is the big advantage?‍‍

‍‍If a recipient of the stepped retirement pension dies before the end of the 10th or 20th pension year, these pension shares that have not yet been paid out will in any case be paid out to the regulatory beneficiaries. In the case of persons without a spouse, children, parents or siblings therefore also receive the pensions that have not yet been paid out as a death benefit.

For the life-long pension portion of level 1, the beneficiary spouse/partner pension of 60% is normally insured (with the option to increase the entitlement to 80% or 100%).

Who is this attractive for?

The stepped retirement pension is aimed in particular at insured persons who have so far preferred a lump sum payment over a pension, for example for the following reasons:

• Protection for their relatives: In the event of an early death, they want to ensure that their saved capital does not expire but benefits their loved ones.
• Higher income at the start of retirement: They want an increased income in the first few years after retirement in order to be able to shape their new phase of life more financially.

Interested? Detailed information can be found in regulations and with an example in our fact sheet (in german).