Receiving German State Pension at 64 yrs of Age

frugalandsave

Hi,

not sure whether someone more experienced can point me in the right direction. 

Quick background: My mother has 35 years contribution to the german state pension system, but is working in the UK. She is 64 years old and has to work another 2 years to receive her UK state pension (She will have contributed 19 yrs in total for UK state pension by then). 

Germany allows state pension to be paid with some small reductions from age 63, when living in Germany and having contributed for 35 years. This is something we would like to apply for, but not sure whether it may be possible if my mum lives outside of Germany.

The usual recommendation i can find online is to contact DWP and inform them that qualifying years have been paid in Germany and DWP will pull it all together to have 35 yrs contribution in the UK. But the UK Pension will only be available from age 66 and at a lower amount than what the German Pension + partial UK pension will be worth. 

Any pointers or suggestions would be welcome. Thanks

Marcon

Might be worth posting on https://community.hmrc.gov.uk/customerforums/pt/5572b28b-00eb-ed11-913a-00155d974e5f (as you can see, I found a question there relating to German pensions, albeit a different question from yours) and seeing if they can point you in the right direction of their 'opposite number' in Germany - or they might even know the answer? I suspect it might be complicated in the aftermath of Brexit...

xylophone

https://www.deutsche-rentenversicherung.de/DRV/EN/International/international_node.html#:~:text=If you live in another,a time limit may apply.

If you live in a member state or agreement country, we recommend that you make your pension application via the insurance agency in your country of residence.

Please note that very different age limits apply in the various countries. In one particular country, for example, an old-age pension can begin at the age of 60; in other countries, however, only at the age of 67. Always find out about your pension entitlements from the relevant foreign countries in advance.

I would suggest that you contact the International Pension Centre.

https://www.gov.uk/international-pension-centre

Get advice or information about pensions and benefits if you live abroad or have lived abroad.

Re tax on German State pension

https://community.hmrc.gov.uk/customerforums/pt/4fac3789-fbb8-ed11-9ac4-00155d9771aa#:~:text=If this is a German,tax you are liable to.

Early_Retire_Free

frugalandsave said:

The usual recommendation i can find online is to contact DWP and inform them that qualifying years have been paid in Germany and DWP will pull it all together to have 35 yrs contribution in the UK. But the UK Pension will only be available from age 66 and at a lower amount than what the German Pension + partial UK pension will be worth. 

Any pointers or suggestions would be welcome. Thanks

This is out of date and relates to the time when the UK was in the EU.  In fact you will now receive two pensions, one from the UK based on your qualifying years in the UK and one in Germany based on qualifying years there.

Whether she can take the German state pension early will depend on their rules and I don't know the answer but I suspect yes.

Is she a UK or German citizen and does she intend to stay in the UK indefinitely?

pinnks

She can absolutely take the German pension under any of their qualifying criteria - 5/35/45 qualifying years.  The basic pension requires at least 5 qualifying years (Wartezeit), the long service pension requires 35 years and the extremely long service pension requires 45 years. What qualifies as Wartezeit for the 35 and 45-year pensions vary slightly, mainly around unemployment credits, I think.

As your mother clearly falls under the Withdrawal Agreement, the EU rules on the coordination of social security systems continue to apply as they did before Brexit.  She will receive a German pension and a UK pension based on the rules of each country and the EU rules on aggregation/pro-rata.

As she has more than 10 UK years, those EU rules will make no difference but in Germany they can not only help her get to 5, 35 or 45 years but may also increase her "Entgeltpunkte" and so increase the amount of pension.  It just depends on her work/non-work history.

Both my wife and I, with fewer than 10 German years, claimed our pensions at 63 by aggregating our UK years.  For me, with School/uni/work in Germany/work in UK/retire, the UK years added only to my Wartezeit but for my wife with a more "colourful" work record of school/dance training/work in Germany/unemployed in Germany/re-training in UK/unemployed in UK/self-employed in UK/work in UK/retire, her Entgeltpunkte increased by about 20% under the EU calculations.  It is, what it is!

If your mother has an aggregated total of at least 35 years she could have claimed her pension at 63, reduced by 0.3% for each month it is taken before normal pension age.  She can of course still claim that at 64 but with a smaller reduction.  If she has at least 45 years she can take it from about 64 without reduction (the age is increasing in parallel with the increase in pension age.  I am March 1959 and could have gone for 64 and 2 months but decided for the pension at 63 instead).  She can backdate a claim for short period of (I think - not sure of the rules without checking), 3 months or so. 

She should claim via DWP International Pension Centre, who will send her a form CFN901 on which she puts details of her foreign work record and German pension number etc - it's not difficult to complete.  DWP forward the relevant info, together with her UK records to Deutsch Rentenversicherung Bund in Berlin, who will contact her for any further info they require, or to tell her how much her pension will be.  In simple terms it is Entgeltpunkte x 37.60€, less any reduction for taking at 63+.  That 37.60€ will increase from 1 July each year.

In the meantime, she could contact DRV (meinefrage@drv-bund.de) and ask them to undertake a Kontenklärung, which they will want to do anyway before awarding a pension.  This will ensure her records are up-to-date for all years.

The EU rules require Germany (in this case) to do 2 calculations, though if you don't have the required number of German years they will dispense with the first one when sending your your actual pension award letter.

1. a pension based solely on her German records applying the German pension rules.  This is called the Independent Benefit or, in German, the innerstaatliche Berechnung.  It is the calculation they would do for any domestic pension claim.  If she has fewer than 5/35/45 years this would be 0€.

2. a "theoretical amount" based on the assumption that all of her contribution periods were in Germany (aggregation of UK/German periods) and then applying German rules to that total.  If periods overlap (Germany works on months with 1 day in a month making the month count, whereas the UK works on weeks in this context), then priority is given to the domestic, German, period and the other, UK, period is disregarded.  This theoretical amount is then "pro-rated" to her actual German periods and is called the Pro-rata Benefit, or, in German, the zwischenstaatliche Berechnung.

Her pension is the higher of 1 and 2, so the EU rules can only benefit her.

She might like to consider opening a Starling Bank account in the UK as that comes with a MasterCard debit card that can be used with both the £ account and the € account with IBAN that you get with this product. She can then spend € if she is in Euroland, or move money between accounts at Mastercard exchange rate (very good) plus a 0.4% fee.

The German pension will be taxable only in Germany - it does not feature on the UK tax return, other than a comment in the "Other Information" box to say it exists.  She will be "beschrängt Steuerpflichtig" meaning, apart from an allowance of 102€ and the fact that a % of the German state pension is tax free, every Cent is taxed without any personal allowance.  If, however, her German taxable income (probably only the German pension) makes up at least 90% of her worldwide income, OR, her income that is not taxable in Germany is less than the Grundfreibetrag, she can elect for a tax fiction to make her subject to "unbeschrängt Steuerpflicht". They still tax only her German-source income but it opens access to the Grundfrebetrag and all other tax deductible amounts, meaning she is likely to pay far less tax.  Her tax office will be Neubrandenburg Rente-im-Ausland (RiA) and she might find this helpful Rente im Ausland (finanzamt-rente-im-ausland.de) - it explains the beschrängt/unbeschrängt election issue and has all sorts of info on things like asking the Finanzamt to assess her without the need for a tax return and how to set-up a SEPA Lastschriftmandat so that payments are taken automatically on the due date, thus avoiding potential late payment issues (remember, if her tax exceeds 400€ per year, she will be subject to payments on account every quarter, so plenty of dates to miss!)

I think that's covered most issues but I am bound to have forgotten something.

pinnks

Early_Retire_Free said:

frugalandsave said:

The usual recommendation i can find online is to contact DWP and inform them that qualifying years have been paid in Germany and DWP will pull it all together to have 35 yrs contribution in the UK. But the UK Pension will only be available from age 66 and at a lower amount than what the German Pension + partial UK pension will be worth. 

Any pointers or suggestions would be welcome. Thanks

This is out of date and relates to the time when the UK was in the EU.  In fact you will now receive two pensions, one from the UK based on your qualifying years in the UK and one in Germany based on qualifying years there.

Whether she can take the German state pension early will depend on their rules and I don't know the answer but I suspect yes.

Is she a UK or German citizen and does she intend to stay in the UK indefinitely?

Why are her citizenship and long-term intentions relevant to this discussion?  Neither impacts either the amount of pension or its taxation.

Hoenir

frugalandsave said:

Quick background: My mother has 35 years contribution to the german state pension system, but is working in the UK. She is 64 years old and has to work another 2 years to receive her UK state pension (She will have contributed 19 yrs in total for UK state pension by then). 

At 66, I'd be surprised if she had been contributing towards or receiving credits towards a state pension provision for a total of 54 years ! 

pinnks

Hoenir said:

frugalandsave said:

Quick background: My mother has 35 years contribution to the german state pension system, but is working in the UK. She is 64 years old and has to work another 2 years to receive her UK state pension (She will have contributed 19 yrs in total for UK state pension by then). 

At 66, I'd be surprised if she had been contributing towards or receiving credits towards a state pension provision for a total of 54 years ! 

While the maths does look strange, simply adding 35 and 19 may not give an accurate picture of age or contributions.

The German years are irrelevant in terms of the UK pension in any even as she has more than 10 UK years and periods in both countries can overlap.  For instance, a person could have 3 years UK starting credits having grown up in Germany and having a contribution record for the same 3 years in Germany, or they could have worked in one country and paid voluntary contributions in the other covering the same period and so on.

frugalandsave

Thanks for all the helpful information. We will contact the DWP International Pension Advice and see what they say.

My mum has dual citizenship. She had 30.5 yrs paid before moving to the UK, we topped up the remaining 4.5 yrs to achieve 35 yrs in total. 

pinnks

Dual citizenship is simply not relevant to any of this.  When you say she topped up 4.5 years, was this in Germany via their voluntary rules?  Not overly important as the pension will be based on aggregating UK and German years anyway.

Germany will require you to claim "a" version of their pension, so you need to decide whether that will be the 35-years pension at, now 63, so reduced by about 8% (2 years would be 7.2%), or go for the 45-years version which might entail wating a month or two but would not be reduced.  I tried claiming "the one most beneficial" but they were having none of that and I had to chose.  Given that she is already 64 and may not ned to wait at all for the 45-year version, that would seem to be the way to go...