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How to setup pension and insurance w/o bank in Germany

Hey, I've been in Berlin bit over a year, and initially set up everything through Deutsche Bank. That means I have my basic insurance with Zurich, through Deutsche Bank, and my Pension is being deducted automagically and tax deducted, again through Deutsche Bank.

Thing is, I really want to leave DB behind, they charge me like crazy, call me in german constantly, don't hold up on promises, and in general have been annoying to work with.

But finding information on how to set up pension and insurance, without speaking german, has been slim.

Any hints for companies / advisors / ways to go about this? My best case scenario would be using number26 as my primary bank, and deal with everything else externally.

kholbekj :

Hey, I've been in Berlin bit over a year, and initially set up everything through Deutsche Bank. That means I have my basic insurance with Zurich, through Deutsche Bank, and my Pension is being deducted automagically and tax deducted, again through Deutsche Bank.

Thing is, I really want to leave DB behind, they charge me like crazy, call me in german constantly, don't hold up on promises, and in general have been annoying to work with.

But finding information on how to set up pension and insurance, without speaking german, has been slim.

Any hints for companies / advisors / ways to go about this? My best case scenario would be using number26 as my primary bank, and deal with everything else externally.

So the insurance usually simply have an automatic deduction (standing order) with your D.B account.
Tax & pension is usually not deducted by D.B. but directly by your employer.

From the way you expressed yourself in the post, I think that the language is not the only challenge you have.
Do you have someone in Denmark that you trust that could explain how stuff with banks usually works? (Not only in Germany). At the stage you're at now - you have the real risk to jump into an even larger hole , with the great help of some savvy financial salesman out there. Based on what you revealed - it might be better to use an older family member/ person of trust to explain such basics.

Banks usually have better things to do than calling people constantly - so it is maybe a hint that something is  making them nervous. By the time banks gets nervous with you- it is a sign that something critical will happen in terms of your risk profile / life as you know it.
A possible example : if you have a very large debt (house/car) and have insurance to cover it, some people go and simply cancel the insurance. Such things gets banks very nervous and people close to court by bondholders without them being aware of the danger. Alternatively, if you have large debt with D. B, simply changing banks might not immediately resolve your challenges.

Suggestion :
1) Inform yourself thorougly before making any sudden changes (like cancelling stuff).
2) If you want to create an acount with number26, go ahead. Transfer some money to it and Make 1 or 2 small payments with it and see if you like their service
3) Maybe read this article from this month on that bank :  http://www.deutsche-startups.de/2016/06 … nden-raus/   on how number26 terminated customers that made "too many free withdrawals"
4) Once you found a bank that handles the basics you can transfer standing orders, over a longer period of time (many months) whilst monitoring your cash flow.

Thanks a lot for your reply! I think I gave the wrong impression though, the reality is that they keep calling me because I refuse to book appointments with someone who doesn't speak english and they really really want to sell me private health insurance (and possibly adjust my credit limit after i started paying full german tax lol). I have no debt or significant assets that they are aware of, if they're nervous with me it might be because I spend a fair bit on bitcoin (I work for a bitcoin payment provider), but honestly I have heard no comments about my spendings, credit, or anything like that. They just feel like I earn enough that they can push more products over my head..

Anywho, the pension is not the required public pension, but my own additional pension savings. I think it's around 160eur/month or something, my advisor explained i was hitting the cap for what could be written off from tax, and it's on my monthly bank statements, so I don't think my employer has anything to do with that. This is the part I'd like to do without DB as middleman. And in terms of insurance, I have my travel insurance tied to my mastercard, and my family insurance through some proxy deal with DB, none of which i understand due to german contracts. I don't happen to have any financially savy family, and my collegues seem to have a bit more of a devil may care attitude towards extended personal security than myself :)

kholbekj :

Thanks a lot for your reply! I think I gave the wrong impression though, the reality is that they keep calling me because I refuse to book appointments with someone who doesn't speak english and they really really want to sell me private health insurance (and possibly adjust my credit limit after i started paying full german tax lol). I have no debt or significant assets that they are aware of, if they're nervous with me it might be because I spend a fair bit on bitcoin (I work for a bitcoin payment provider), but honestly I have heard no comments about my spendings, credit, or anything like that. They just feel like I earn enough that they can push more products over my head..

Anywho, the pension is not the required public pension, but my own additional pension savings. I think it's around 160eur/month or something, my advisor explained i was hitting the cap for what could be written off from tax, and it's on my monthly bank statements, so I don't think my employer has anything to do with that. This is the part I'd like to do without DB as middleman. And in terms of insurance, I have my travel insurance tied to my mastercard, and my family insurance through some proxy deal with DB, none of which i understand due to german contracts. I don't happen to have any financially savy family, and my collegues seem to have a bit more of a devil may care attitude towards extended personal security than myself :)

Phew. Ok that relaxes it a bit then. But only a bit  :|
1) So don't have health insurance yet? (It is technically illegal 0.o). If you earn more than 56k you can have a private health insurance. The installment is 15,5% of your Brutto. If you're caught by the Finanzamt,  you will have to pay 1/6 of the due fee for all those months without proven payment. That can add up.

2) 160€ p/m for pension sounds way too small even if you are 21. As independent it's allowed to have it as small as 85€ per month. But as a rule of thumb you have to save 9,35% of your brutto salary per month. Your employee is obliged to match/pay also 9,35% if salaried.
For a contractor that becomes 9,35%x2=18.7% . If you don't plan to get old in Germany that's another thing, but choose a country in which you contribute and build savings there. Ofc if your father is a billionaire that's another story. The point is you are saving it for yourself and not for someone else. Bitcoin is also a way of saving. But don't keep all your eggs in one hatch.
The benefit with saving money in a pension fund instead of in a bank/shares is that it not taxed. That makes a huge differences over decades. The detriment is that you cannot use pension money to buy a camaro when you want. Ofc there is also a max, but 160€ doesn't ring like a max bell to me.

3) the earlier bank you mentioned sounds like a fly by night - You get what you pay for (with banks there are always some special extra tail to that).  checkout some "semi"-independent site : https://finanzen.check24.de. Since you mentioned bitcoin - I assume you have something to move sums internationally, this basically only leaves access to ATM's. Be careful of the fine print. a number of banks have 0€ fee. but then they don't have many ATM's in all cities, which then forces you to use "other" ATM's of which there is a fee of 3-5€ per transaction . If you travel a lot internationally then consider the ATM fees also internationally.

Insurance contracts and bank accounts are usually independent of each other, so you can cancel one without affecting the other (just tell the insurer that payments should be withdrawn from the new bank account from now on).
You can freely open a bank account with any bank. There are many that offer no-fee accounts and relatively good service. Contact me to get my own private recommendation (I won't post it here, because I don't want to advertise them publicly).

JohannesM :

Phew. Ok that relaxes it a bit then. But only a bit  :|
1) So don't have health insurance yet? (It is technically illegal 0.o). If you earn more than 56k you can have a private health insurance. The installment is 15,5% of your Brutto. If you're caught by the Finanzamt,  you will have to pay 1/6 of the due fee for all those months without proven payment. That can add up.

Right, that just got set up through my employer last month, wasn't a requirement my first year because I was working a stationary contract from Denmark and remained covered from there, so should be all good.

JohannesM :


2) 160€ p/m for pension sounds way too small even if you are 21. As independent it's allowed to have it as small as 85€ per month. But as a rule of thumb you have to save 9,35% of your brutto salary per month. Your employee is obliged to match/pay also 9,35% if salaried.
For a contractor that becomes 9,35%x2=18.7% . If you don't plan to get old in Germany that's another thing, but choose a country in which you contribute and build savings there. Ofc if your father is a billionaire that's another story. The point is you are saving it for yourself and not for someone else. Bitcoin is also a way of saving. But don't keep all your eggs in one hatch.
The benefit with saving money in a pension fund instead of in a bank/shares is that it not taxed. That makes a huge differences over decades. The detriment is that you cannot use pension money to buy a camaro when you want. Ofc there is also a max, but 160€ doesn't ring like a max bell to me.

Okay, I'm not too sure, advisor guy might have confused me. I don't plan to get old in Germany though, does it mean it's pointless to use the saving system here>?

JohannesM :

3) the earlier bank you mentioned sounds like a fly by night - You get what you pay for (with banks there are always some special extra tail to that).  checkout some "semi"-independent site : https://finanzen.check24.de. Since you mentioned bitcoin - I assume you have something to move sums internationally, this basically only leaves access to ATM's. Be careful of the fine print. a number of banks have 0€ fee. but then they don't have many ATM's in all cities, which then forces you to use "other" ATM's of which there is a fee of 3-5€ per transaction . If you travel a lot internationally then consider the ATM fees also internationally.

Yeah definitely noticed the ATM scheme around here. Coming from Denmark even the notion of having cash is so foreign, but have gotten used to do infrequent cashouts. I guess most of my needs are standing orders and the ocational schufa(?) document. And yeah, I would not mind taking care of the savings myself, but suspect deducting that stuff from tax as a pension is hard if not impossible for a financial/legal layperson.

kholbekj :
JohannesM :

2) 160 p/m for pension sounds way too small even if you are 21. As independent it's allowed to have it as small as 85 per month. But as a rule of thumb you have to save 9,35% of your brutto salary per month. Your employee is obliged to match/pay also 9,35% if salaried.
For a contractor that becomes 9,35%x2=18.7% . If you don't plan to get old in Germany that's another thing, but choose a country in which you contribute and build savings there. Ofc if your father is a billionaire that's another story. The point is you are saving it for yourself and not for someone else. Bitcoin is also a way of saving. But don't keep all your eggs in one hatch.
The benefit with saving money in a pension fund instead of in a bank/shares is that it not taxed. That makes a huge differences over decades. The detriment is that you cannot use pension money to buy a camaro when you want. Ofc there is also a max, but 160 doesn't ring like a max bell to me.

Okay, I'm not too sure, advisor guy might have confused me. I don't plan to get old in Germany though, does it mean it's pointless to use the saving system here>?

Point is that you have to accumulate savings one way or the other.
Some belief that they can perform better than the state with comparable risks and therefore have a private pension (ie Riester/something else). Bottomline is that a national pension is good for comparing your own growth of wealth over time. If you are performing better over a longer term, you get a chip on your shoulder. If you are performing weaker, it's a sign that one are not as gifted with investments as one thought and should try to fold-in again. Since we don't know your accumulated debt, ability to roll that debt, or specifcs it cannot consitute a basis for decision taking -  so take it as an opportunity to get at least one other advisors opinion on savings, since 160€/m suggests that you earn only 1.7k pm brutto. If that is true, then you are on par on what the tables suggest you save. If you earn multiples of that then 8,35% of that brutto is the "minimum average" that you should be saving somewhere, somehow.


kholbekj :
JohannesM :

3) the earlier bank you mentioned sounds like a fly by night - You get what you pay for (with banks there are always some special extra tail to that).  checkout some "semi"-independent site : https://finanzen.check24.de. Since you mentioned bitcoin - I assume you have something to move sums internationally, this basically only leaves access to ATM's. Be careful of the fine print. a number of banks have 0 fee. but then they don't have many ATM's in all cities, which then forces you to use "other" ATM's of which there is a fee of 3-5 per transaction . If you travel a lot internationally then consider the ATM fees also internationally.

Yeah definitely noticed the ATM scheme around here. Coming from Denmark even the notion of having cash is so foreign, but have gotten used to do infrequent cashouts. I guess most of my needs are standing orders and the ocational schufa(?) document. And yeah, I would not mind taking care of the savings myself, but suspect deducting that stuff from tax as a pension is hard if not impossible for a financial/legal layperson.

If you are new to the tax ballgame, all savings you do in private has been loaded with VAT. That is then the  minimum "threshold" that you to beat by investing on the stockmarket.

Let's look at the pros and cons through an oversimplified (not accurate) example :

ie Let's say an imaginery person earns 20 532 € per year.

Option 1) Then the calculation tables says he have to pay 2703€ Tax per year (if he declares his citizenship outside that of Germany). That is 13% effective Tax - leaving him with 1485€ per month. If he save 319€ pm in some private account he has 1165,08€ pm to live with.

Option 2) If that same person had chosen to belong to the Pension he would be exempt of tax for that 319€ part, his employer have to match that with also 319€ (649€ total) and he would still take 1249,66 € home. That is  84€ /pm more in the back pocket and a very certain investment, matched also by an employer contribution.

So the bet for Option 1 instead of Option 2 would be that that 319€ pm have to be invested somewhere to beat that 639€ pm growing at 4%. That is roughly 7.5% growth for example (over a 30 month period). Say the average NYSE returned  only 7% (winners and loosers since 1951). So you have to be persistently more lucky than the average to beat that deal. The only way to beat that is to be self employed and jam a smaller income, write off bad debt, or beat the average investor - or a combination of all and to hope to get away with that for 45  years from the Internal Revenue Service. And that's a lot of risk. There are some examples of some that did it. Trump is one. George Soros, Steve Jobs some others. There were also "unlucky" ones. I would say a widely accepted way is to have multiple saving schemes : Some pension+ some cash savings+ some shares+ some fixed assets.

Spread your eggs over many baskets.

JohannesM :

Option 2) If that same person had chosen to belong to the Pension ...

You cannot choose!
It is compulsory for all employees (and their employers) to pay into the public pension scheme (Rentenversicherung), and impossible to join for most others.
"Option 1" can only be chosen on top of the public pension scheme, if you think the public scheme will not pay out enough in your old age (as it well might, because it's a pay-as-you-go system and there will be more old people to feed from contributions of less younger ones).

beppi :
JohannesM :

Option 2) If that same person had chosen to belong to the Pension ...

You cannot choose!
It is compulsory for all employees (and their employers) to pay into the public pension scheme (Rentenversicherung), and impossible to join for most others.
"Option 1" can only be chosen on top of the public pension scheme, if you think the public scheme will not pay out enough in your old age (as it well might, because it's a pay-as-you-go system and there will be more old people to feed from contributions of less younger ones).

Hi Beppi,

1) The choice of employment determines what whether you are obliged to take a state pension or not. Compulsory state pensions does not apply to:

Self employed* or freelancer
Judges,
Professional soldiers
Public servants
People in religious institutions

*certain categories of self-employed people like craftsmen and artisan are forced to state pensions, because they other implicit benefits.

For the specific case here in this thread- freelancer is a definite alternative.

Of course, salaried workers have no choice and their employer applies on their behalf.

2) once you've reached the upper limit/ceiling for the pensionable  salary scale > ca. 87k€, most people divert that tax free part to private pension funds.




3) Read more here from the German government website:

http://www.deutsche-rentenversicherung. … _node.html

4) Some other recent thread here exacly shows what can go wrong if you are an expat freelancer, chose not to belong to the state fund and spent the money elsewhere ie in your country of origin for 20-45 years:

http://www.expat.com/forum/viewtopic.php?id=579521

Suddenly you might have a mismatch of living standards if you still want to live as pensioner in Germany. It can be a very unwelcome shock, and you cannot turn back the clock.

Alright, it's all a bit confusing. I can give  you some more clarity.

Currently my brutto is 5k.

My payslips has following postings:
Steuerrechtl. Abzüge: 1.131,48
SV-rechtl. Abzüge: 954,60

In addition, from my bankstatement I have following two postings:
Smaller I guess is insurance, and the other I hope is pension. :)

SEPA-Direct Debit Zurich Insurance plc Niederlassung fuer Deutschland    -46.81

SEPA-Direct Debit Zurich Deutscher Herold Lebensversicherung Aktiengesel    -162.17   

I guess that means I'm way way under target on the pension stuff :)

This means you are compulsorily contributing to the state pension system (that is part of "SV-rechtl. Abzüge) AND you have two separate insurances with Zürich - check your records what they are, as it's not apparent from the bank statement.

Ah ok, thanks for the clarification.

kholbekj :

Those two (SV+SteuerRecht) were the key words.
So no worries -all the standard obligations all covered.

The  Lebensversicherung is life insurance


SV-rechtl. Abzüge (Compulsory SV = Sozialversicherung  (Social Insurance))

SV= PV+RV+AV+KV


PV= Pflegeversicherung  (Long Term Care Insurance)
RV= Rentenversicherung (Pension)
AV=Arbeitslosenversicherung (Jobless Insurance)
KV= Krankenkasse (Health Insurance)

Steuerrechtl. Abzüge = steuerrechtlichen Abzüge (
Lohnsteuer =Wage Tax
Kirchensteuer= Church Tax
Solidaritätszuschlag =Solidarity Tax (Paying for East Germany Integration 26 years ago)



Sidenote : to insure your life for 250k€ at 21 your monthly installment can be as low as 15€ (for a smoker (same age) that would be ca 45€).
Compare here : http://versicherungs-angebot.focus.de/r … LV/rechner

So 15€-45€ is a a large difference to what you're paying today. Maybe you have to understand what special conditions you get with that or why you needed that high monthly  from Zurich. You have to compare apples with apples, though. simply getting another agent to sell you any another insurance won't necessarily bring you foward. Their usual trick is to sell combi offers (like combining insurance+savings+extra pension) all in one package.

On this combi packet fuzzballs - I can only say : Do you also buy an all-in-one coffee-machine, PC and tumbledrier? If you don't see the sense in that, then why combine the other stuff? But different strokes for different folks. We've pin-pointed some possible improvements, now you have to do some comparitive calculations of its benefit to you, personally. Remember Mid-age men have different ratios in these things than a guy in pension or a guy that just started working - there are no magic, catchall formula.

Okay, yeah that's tricky numbers. I'm a 24-year old smoker, with no health issues at this time. Not that they ever asked me. And I don't really remember getting a 'life' insurance, all I've asked for is a family insurance, or however it's called, which covers when stuff goes down in my house like a fire or i break someone else's stuff. And they wanted extra since my outer walls are all glass, as i recall.

The company named BlaBla Lebensversicherung AG does not necessarily sell only life insurance, thus the deduction might well be for something else.
But my advice is: If you don't understand what an insurance covers, you don't need it and should terminate it at the next possibility.

kholbekj :

Okay, yeah that's tricky numbers. I'm a 24-year old smoker, with no health issues at this time. Not that they ever asked me. And I don't really remember getting a 'life' insurance, all I've asked for is a family insurance, or however it's called, which covers when stuff goes down in my house like a fire or i break someone else's stuff. And they wanted extra since my outer walls are all glass, as i recall.

That word that you are looking for  is hausratversicherung/houshold insurance for house contents- looks like it's that 46€ stuff. Double check.

Nonetheless, that 146€ is definitely life insurance because that is stated in the name (lebensversicherung). Now the fact that you don't know what it is for, doesn't mean that it is not required to serve some purpose which you might have stated or have forgotten. We don't know the details enough : Ie it can cover a large bond (bought property), or you wanted to accumulate money for a mortgage. Life insurance and policies are financial instruments that are sometimes used for interesting reasons.You'll probably have to find out the features again, to refresh your mind.

A little known fact about the German public pension scheme for foreigners:
You need to have contributed for 5 years (60 months) during your lifetime to get ANYTHING out in old age.
If you contributed for less time, you can apply to get YOUR contributions (half of the total contribution) paid out in a lump sum without interest. Your employer's contribution (the other half) are a gift to the state. And if you don't apply for the payout (e.g. because you don't know about it or forgot after such a long time) it all falls to the state.

beppi :

A little known fact about the German public pension scheme for foreigners:
You need to have contributed for 5 years (60 months) during your lifetime to get ANYTHING out in old age.
If you contributed for less time, you can apply to get YOUR contributions (half of the total contribution) paid out in a lump sum without interest. Your employer's contribution (the other half) are a gift to the state. And if you don't apply for the payout (e.g. because you don't know about it or forgot after such a long time) it all falls to the state.

Hi Beppi, yes that is interesting fact on the five years.

So paying out only  50% of (your) contribution=25% of the total investment (including employer contribution) somehow makes sense (from a community perspective):

1) it is an early withdrawal - on an extremely long investment(ie even in bank penalizes for that)
2) up until the point of withdrawal, absolute zero tax has been paid on that. So usual "einkommensteuer"/income tax still must be applied.
3) the payout was intended to be incremental (over 30 years) and not lump-sum.
4) there is an additional risk then on that Individual in terms of a future liability. If he/she is a German citizen, there is a likely probability that money might be spent unwisely in another country, upon which such individual will return to Germany to burden the social system.
5) It should hinder individuals to perceive that as spending money.

In my opinion 25% is more than the risk (from the state side) allows. In addition, individuals with a continual negative income after 45 (high spending with inherited/ accumulated assets that doesn't secure support 10 years after 68) should also be considered  under the pension scheme. (Pre-pension candidates)

Example : We knew a woman in Bonn, that inherited substantially from her parents 50 years ago. She Never even considered earning money and went on holidays 6 times a year. She managed spend all at the age of 58, 14 years ago, and then had no reservations to claim from the social system still today, but still have property in Brazil, Cape Town and Germany.

What is sad is that it takes away from the true pensioners, the jobless, or those where fate  simply never dealt some cards in life.

I would suggest shopping around for an established bank in your city that has an English speaking advisor. That they try to push one on you that only speaks German is truly unacceptable and not up to standard. Another branch might have someone but it should not be hard to find. But I would be very cautious to go with an unknown fly by night bank. Number26 sounds like it lands in this category as it is definitely not an established bank.

All established banks are pushing people to do online banking anyway to reduce personnel. Doing things online can be more convenient and cheaper but involve some risk. “Giro” accounts are what you need to make and accept payments. Most do have a monthly fee unless you have a regular minimum amount of 1000 or 1200 Euros being put onto the account. Standard for someone with a regular paying job but difficult for self-employed people like myself where the income is sporadic and irregular. Recently the Postbank (belongs to the Germany Postal Service) was offering such accounts for free with NO minimum monthly deposit.

To insure the objects in your house/apartment you need a household-property insurance or Hausratversicherung  which should cost 100 to 150 Euro PER YEAR!
To cover damaging someone else’s property then you need a liability or Haftpflichtversicherung. One that covers you privately should cost around 60 to 80 Euros or so a year. If you need one that covers things connected to a business or profession then you would usually pay 2 to 3 times as much. But this would usually not apply for someone who has a normal job rather than being self-employed or running their own business.

Lebensversicherung is life insurance, probably a whole life policy rather than a cheap term life policy. Cancel it! They are pulling a fast one on you to have sold you this and whole life insurance is a legal rip-off to begin with. No bank can require to have or keep such insurances. But the problem is with the insurance and not the bank per se.

My bank - Deutsche Kreditbank (DKB) - offers free Giro accounts with no minimum balance or monthly turnover, but with free cash withdrawals worldwide.
If you're interested, please contact me - for recommending a new customer I'd get recognition points that can be exchanged for useless plastic toys and other things my daughter loves.

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