New Safety for Old-Age Reserves of Self-Employed Introduced

As of December 14, 2006, Germany has introduced a new measure to secure the old-age savings of self-employed persons. The new law gives self-employed persons the same security as employed persons. Execution of this law in general exempts old-age security schemes from execution. The new law has ended this unequal treatment.


Until now, all types of income earned by self-employed persons were not eligible for exemption of enforcement. In severe cases, this meant that all savings were seized, liquidated, and forwarded to all and any creditors. As a result, later at the time of retirement, these persons were then subject to welfare.

The new law aims at relieving the state budget and securing the minimum of sustenance for  individuals at old age. The German government especially wants this measurement to enhance self-employment in Germany. Now all and any old-age securities are to be protected. This protection has a twofold approach:

  1. Firstly, all matured pensions are now just as much protected as statutory pensions.
  2. Secondly, to enable the self-employed person to build such an old-age pension, the period of saving for the pension is also to be protected.

This theoretically opens the possibility of misuse. However, such abuse will be prevented by only protecting such capital that is irrevocably paid into an old-age savings system. This irrevocability only allows you to access the accrued capital after retiring or in the case of long-term disability. Beyond that, you as the holder of the insurance must irrevocably forbear to exercise your rights from the insurance contract. Only in the case of death may a lump-sum option be stipulated. Survivors are also considered in the scope of this regulation. They do not have to fear forfeiting the estate because the deceased had too many debts.

The amount of the financial plan capital exempt from execution is strictly limited and dependant upon the age of the insured person. The general idea is to exempt the yield of capital stock that would be exempt for employees. The sliding exempt rates will be fixed every year anew. The reason for the sliding amounts are, for example, that an 18-year-old has more time to save for his pension then a 60-year-old. The exempt amounts vary between € 2,000 for a 18-year-old and up to € 9,000 Euro for a 60-year-old. The state subsidized pension plans, the so-called »Riester-Rente« are also included in the exempted pension schemes.

Published on the old CMS: 2007/5/8
Read on the old CMS till November 2008: 140 reads

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