What you also need to know about the Mars Pension Plan!
Here is an overview of some important topics:
What was it about taxes and social security contributions? What actually happens if you leave Mars? And what if you take time out for family, parental leave, for example? How are the Mars Pension Plan benefits protected in case of insolvency?
Resigning (after 2006)
Today’s working world is more mobile. Perhaps you won’t stay at Mars until retirement. What happens to your Mars retirement pension?
The balance of the Associate Contribution Plan is simply carried on as a non-contributory deposit. It has been non-lapsable from day one. You can have it paid out once you officially enter retirement. In addition, you and your family continue to be provided for in case of a reduced earning capacity or death.
The balance of the Associate Retirement Plan is after 5 full years of employment vested. The amount of your pension after you have left Mars is determined by law. When you leave, you receive a vesting certificate of your entitlements to help with your planning.
Building a buffer – Saving on taxes and social security contributions.
Taxes: All contributions going into the Mars Pension Plan are tax-free – Mars contributions as well as your own contributions. Your contributions are deducted directly from your gross income before taxation. As a result, the taxable base decreases – so you pay less in taxes today.
However, benefits from the Mars Pension Plan are taxable whenever they are paid out – that is called deferred taxation. And that pays off: Your tax rate in retirement is usually lower than during working life.
Social security contributions: Up to a limit of 4% of the CAC, contributions are also exempt from social security contributions. As a rule, there are no social security contributions due for salary components above the CAC. Social security contributions are also not due until benefits are paid, and then they are usually lower: because there are no contributions deducted for unemployment benefits and state pension. However, your health insurance and long-term care insurance must still be paid in full (employer’s and employee’s share of the contribution).
Please note: Saving on social security contributions also means that lower contributions are paid into the compulsory state pension fund, which in turn decreases your legal claims. However, this is more than offset by the Mars contributions you get in return for your investment, and by the solid performance!
Payout methods: Each payout method (one-off lump sum, installments or regular pension) has a different impact on taxes and social security contributions. The exact impact on you depends on many factors – for example, your tax bracket, the number of your children, your total income, etc. Therefore, it is recommended to consult with your tax advisor on the choice of payout methods.
Colorful life, flexible provision: Time-out and part-time.
A person’s working life is often very diverse – this may be from taking time-out for family, temporary part-time work or sometimes also from a long spell of illness. What does this mean for your retirement pension?
There is a simple rule for contributions: If you get a salary from Mars, you also receive Mars contributions and can convert some of your income into your own contributions. If the employment relationship is dormant and you do not get a Mars salary (for example, during parental leave or a longer illness), there will be no Mars contributions and you cannot convert income.
If you work part-time, this is considered when determining your contributory income.
Even in a worst case scenario – insolvency at Mars – your Mars retirement pension is protected: The Pension Security Association (PSV = Pensions-Sicherungs-Verein) provides a solid safety net: In case of insolvency at Mars, the PSV is responsible for paying the Mars benefits in all aspects:
What is behind the PSV?
PSV or PSVaG is the German abbreviation for Mutual Pension Security Association. It is a legally established institution, and membership is obligatory for companies in order to protect the occupational retirement provision in case of employer insolvency.
Employers pay an annual contribution to the PSV. In case of insolvency of a member company, outstanding pension payments are then funded by the contributions paid by all members. Currently, the PSV has approx. 93,000 member companies (as of 2013).