Old Age Pension Schemes for the Liberal Professions

Mandatory insurance

• The liberal professions, mainly including self-employed medical doctors, dentists, veterinarians, pharmacists, architects, notaries, lawyers, tax consultants, financial auditors, psychotherapists, engineers.
• Under certain conditions, employed persons in the liberal professions can opt out of mandatory insurance in statutory old age pension schemes substituted by mandatory insurance in the liberal professions pension scheme.

Voluntary insurance

• Possible under certain conditions; formerly mandatorily insured persons can request to continue insurance on a voluntary basis.

General finances

• Funded schemes based on contribution payments and capital revenues, with various financing mechanisms.
• No government guarantees or state subsidies.

Contribution rates

• Fixed share of declared income paid by insured person; contribution rates can differ between funds.
• Rates often based on contribution rate of statutory old age pension scheme (some funds request higher mandatory contributions with upper and lower limits), under certain conditions reduced contribution payments possible.
• Statutes may allow for additional voluntary contribution payments (capped by maximum amount for the total sum of mandatory and voluntary payments).

Taxation of contribution payments

• Tax exemptions for insurance contributions (100% after 2024) capped by maximum amount.

• Pension funds (in total 96) are independent public law institutions (no insurance carriers), self-administered and profession-/region- specific.
• Special public authorities under the jurisdiction of the Länder are responsible for the administration and organisation of the schemes, with legal supervision by the responsible ministries of the Länder.

Qualifying conditions*

• Retirement age increases to 67 without minimum contribution period (some exceptions: minimum contribution period of 60 months).

Early retirement

• Often available at age 60 with negative (permanent) adjustments to pension benefits (according to statutes).

Deferred retirement

• Retirement can be deferred, often to a maximum age (up to 70/72) and with additional pension rights (according to statutes). 

Combining employment & retirement

• Termination of employment is usually not a precondition for claiming pension benefits.

*Conditions are regulated in self-administration by the statutes of the pension fund and can differ from the general regulations stated above.

Pension payments

• Monthly pensions (no lump sum payment); dependent on total amount of individual contribution payments and contribution period; revenues may differ between pension funds.

Factors for benefit calculation

• Benefit calculations according to self-administration by the different pension funds; generally, amount of pension benefits depend on the sum of (mandatory and voluntary) contribution payments for a given calendar year, multiplied with an age-dependent actuarial coefficient.
• Adjustments: depending on surpluses in reserve funds and decision of administrative board.

Taxation and social security contributions on pension payments

• Pension benefits are subject to income tax (100% for pensions granted in 2040) according to the general tax rules.
• Contributions for (private) health insurance and long-term care insurance are mandatory (fully paid by retired person).