Instalment or pension? It depends!
It depends on your financial planning. You can determine whether the payout will happen as a monthly lifelong pension or as instalments. It’s your decision over what period of time the instalment payments will go. And the best of all: You can even combine both options!
Please think about it: The different payout options have different tax impacts. You’d best discuss it with a tax adviser.
The instalments
You’re very flexible here: You come to an agreement with Mars as to how many instalments you would like – either up to 10 annual instalments or up to 120 monthly instalments – however it best fits your financial planning.
The start of payments is the month in which you enter retirement. With annual instalments you can also agree on a later date (at the latest in January after the start of your retirement). That can be to an advantage when it comes to taxes – discuss it with a tax adviser!
The instalments not yet paid out are subject to interest on the basis of the current actuarial interest rate. You will be informed of the interest with the start of payout.
Irrespective of the interest, each annual instalment will be increased by 1 % compared to the previous year. The monthly instalments will be raised by 1 % every 12 months.
If you were to die before all the instalments had been paid out, your survivors would receive the remaining instalments. This includes: your spouse, your registered common-law partner, your specified life companion or children entitled to a child allowance.
The pension
Capital turns into a pension.
The credit balance is converted into a pension according to actuarial principles. That means that various factors are taken into account, including statistical life expectancy, an actuarial interest rate and whether you have planned for a survivor’s pension – more about that below.
It’s due to the statistical life expectancy that your pension will turn out lower if you enter retirement before the age of 65. Because then the benefit will have to be paid out over a longer period of time. Therefore, the earlier you retire, the less your monthly pension.
Protecting your family
You can decide before the start of your pension payout: Should your partner receive a survivor’s pension after your death and thus be further protected? You can have your spouse, registered common-law partner or a partner with whom you have lived in a relationship similar to marriage also protected. After your death he or she will receive 60 % of your last pension payment. However, due to this protection your own pension will decrease.
By the way: During your work life your family is automatically protected in the event of your death – more about that under Risk protection.
Steadily growing bit by bit
Your pension is increased each year by 1 %.
Five things you should know about the payout!
- You determine how you receive your payout
With the credit balance that is based on your contributions and the Mars contributions, you can decide whether it should be paid out in instalments or as a pension. Or everything combined together. It’s all very flexible. You’ll find the ruleshere.
- You decide when you retire
Retirement in the Mars pension plan is normally oriented to the statutory retirement age. But, of course, you can retire earlier: The earliest you can request the benefit is on your 60th birthday. But beware – those who enter retirement before reaching the statutory retirement age will have to expect deductions. More on that here.
- Not just a pension plan
Don’t forget: You’re not protected only for retirement. There’s also a payout in the event of disability or death. For more information simply take a look at this link!
- Taxes will be due now
The contributions from Mars and from you were tax-exempt in all levels. Now, upon payout, taxes will be due. And social security contributions will also be incurred. Nonetheless this is an advantage for you: As a rule, your tax rate in retirement is lower than your tax rate during your working life. And when it comes to social security contributions, the contributions for the state pension and unemployment insurance end (however, the full employer and employee rate is to be paid for health and long-term-care insurance).