How does the Rürup-Rente (Basisrente) pension work for tax purposes in Germany?

The Rürup-Rente, officially called Basisrente, is a tax-deductible private pension product available to all German taxpayers, but particularly attractive to self-employed people and high earners who are not in the statutory pension system and cannot access Riester. Unlike Riester, there are no government allowances; the benefit comes entirely from the tax deduction on contributions.

For 2024, contributions to a Basisrente contract are deductible as Sonderausgaben (special expenses) up to €27,566 per person (€55,132 for jointly assessed couples). This ceiling is shared with contributions to the statutory pension system (Deutsche Rentenversicherung) and civil service pension funds, so self-employed people without other pension contributions can utilise the full limit. In 2024, 100% of contributions up to the ceiling are deductible (the deductibility percentage was phased up over the years and reached 100% in 2023).

The payout in retirement is fully taxed as income at your marginal rate at that time. The product is strictly regulated: the accumulated capital cannot be paid out as a lump sum, surrendered for cash, or used as collateral. Only lifetime annuity payments are allowed, starting no earlier than age 62 (for contracts from 2012 onwards). This illiquidity makes the Rürup-Rente unsuitable as an emergency savings vehicle, but for high-earners seeking to reduce current tax liability while building retirement income, it is one of the most tax-efficient tools available.

This is general information only, not professional tax advice. Consult a qualified tax professional for your specific situation.