The Home Pension - A Government Subsidy for Retirement Provision

1. Introduction

The Home Pension Act offers a government subsidy for retirement provision through owner-occupied residential property. Compared to the Riester pension, the Home Riester pension allows for rent-free use of the property in retirement. This article highlights the basic rules, eligible beneficiaries, allowances, funding rules, taxation in retirement, and much more related to the home pension.

2. Eligible Beneficiaries

A variety of individuals are eligible for subsidies, including public service employees, workers in the statutory pension insurance, self-employed individuals, freelancers, civil servants, federal volunteer service members, people with disabilities, and other groups.

3. The Allowances

The amount of annual funding through basic and child allowances varies depending on family status and number of children. The allowances can significantly increase government support for retirement provision.

4. The Funding Rules

There are five different funding approaches in the home pension model that allow the use of Home Riester as retirement provision for acquiring owner-occupied residential property. These approaches include the use of Riester assets for the purchase, construction, or repayment of a property, as well as the integration of building society products into the financing.

4.1 Calculation Examples

Scenarios for applying the funding rules are calculated as examples, taking into account personal contributions, allowances, and interest rates.

5. Taxation in Retirement

From the age of 62, the home pension is subject to deferred taxation. The housing subsidy account plays a crucial role here, as it documents the subsidized contributions and forms the basis for taxation in retirement.

5.1 The Housing Subsidy Account

The notional housing subsidy account is annually interest-bearing and influences the amount of income tax payable in retirement. Various tax models and calculations are explained to provide a better understanding of the tax aspects.

5.2 The Tax Burden

The tax burden in retirement is illustrated with examples. The choice between a one-time taxation or a successive taxation of the housing subsidy account affects the tax burden in retirement.

6. The Subsidized Apartment

The requirements and usage possibilities of the home pension for the acquisition, construction, or debt relief of owner-occupied residential property are described in detail. Various scenarios for the residential economic use of Riester funds are examined.

7. Detrimental Use

If the subsidized apartment is no longer owner-occupied, certain notifications must be made. The consequences of detrimental use of the home pension are explained, including possible tax implications.