Definition and Legal Basis of Retirement Allowance
The retirement allowance is a pension benefit anchored in German civil service pension law for civil servants who voluntarily or for other reasons leave civil servant status before reaching the statutory retirement age and do not acquire entitlement to a classic pension under civil service regulations. The retirement allowance is intended to compensate for the loss of civil service pension benefits and ensure old-age security. The legal basis for the retirement allowance is provided by the Federal Retirement Allowance Act (AltGG) and corresponding state regulations.
Legal Basis and Statutory Provisions
Federal Statutory Regulation
At the federal level, the Act on the Granting of Retirement Allowance to Dismissed Civil Servants and Pension Recipients as well as other Eligible Persons (Retirement Allowance Act – AltGG) applies. This Act regulates the personal and substantive requirements for entitlement, calculation, payment, as well as exclusion and suspension provisions.
State Law Regulations
In numerous federal states, there are independent retirement allowance laws or corresponding regulations within the state civil service pension acts. The rules are largely based on the federal regulations but may vary in details such as qualifying periods, calculation, and payment.
Eligibility Requirements for the Retirement Allowance
Personal Requirements
Civil servants, judges, and other persons in a public-law service relationship who leave service at their own request or with the consent of the employer without a pension entitlement are entitled to a retirement allowance. The most important requirements are:
- Termination of the civil service relationship according to certain regulations (particularly due to dismissal at one’s own request)
- Revocation of appointment for reasons other than disciplinary or criminal offenses
- Exclusion from pension benefits under civil service pension regulations due to termination of the civil service relationship
As a general rule, entitlement to retirement allowance requires a minimum period of service (at least five years of pensionable service).
Exclusion from Entitlement
No retirement allowance is granted if the service relationship is terminated for disciplinary or criminal reasons or if a pension event under § 4 AltGG, such as entitlement to a pension, occurs.
Calculation and Amount of the Retirement Allowance
Basis of Assessment
The amount of the retirement allowance is determined by the pensionable remuneration earned during the period of service and the period of pensionable service. The calculation is based on provisions of civil service pension law but with specific adjustments. The decisive figure is the so-called retirement-allowance-eligible annual amount, which is determined according to a specific formula.
Age-Specific Amount and Age of Access
The entitlement to retirement allowance arises upon reaching the standard retirement age in accordance with § 18 AltGG, unless the allowance is paid earlier, in which case corresponding deductions are applied. Early use is possible under certain specified conditions.
Offsetting of Other Benefits
When drawing retirement allowance, other benefits, for example from statutory pension insurance or supplementary pension schemes, are offset. The allowance may be suspended if certain income limits or offsetting regulations are exceeded.
Procedure for Applying and Payment of the Retirement Allowance
Application Requirement
The grant of a retirement allowance requires a written application. The application must be submitted to the last competent administrative authority. There is a deadline for application, failure to observe which will result in forfeiture of the benefit.
Payment
Payment is made monthly and begins upon reaching the retirement age or at the time of early use. The retirement allowance is, like pensions and civil servant pension benefits, subject to income tax.
Suspension and Exclusion Regulations
Suspension of the Retirement Allowance
The retirement allowance is fully or partially suspended if gainful employment is taken up or other pension benefits subject to offsetting regulations are received. This is to prevent overcompensation in old age.
Re-entry into a New Civil Service Employment
If a new civil service position is taken up, the retirement allowance is suspended or may be cancelled altogether, since new entitlements from civil service pensions may arise instead.
Tax and Social Security Aspects
The retirement allowance is subject to income tax (§ 19 EStG). It is not subject to social security contributions, as it is a benefit from a public-law service relationship. There is, however, no entitlement to compulsory health insurance for pensioners.
Differences from Civil Service Pension (Ruhegehalt)
The retirement allowance differs significantly from the classic civil service pension (Ruhegehalt). While the Ruhegehalt is a statutory retirement benefit for civil servants paid upon regular retirement age or due to incapacity, the retirement allowance serves solely as a safeguard when civil service pension benefits cannot be claimed. In terms of calculation and amount, the retirement allowance is generally lower than the comparable Ruhegehalt.
Significance for the Pension Landscape
The retirement allowance represents a significant element of social security for civil servants in German public service law who voluntarily leave service prematurely. It provides compensation for pension entitlements from statutory civil service relationships and thus contributes to comprehensive protection in old age, even if the classic civil servant status does not extend to the statutory retirement age.
Literature and Further Provisions
- Act on the Granting of Retirement Allowance to Dismissed Civil Servants and Pension Recipients (Retirement Allowance Act – AltGG)
- State Retirement Allowance Laws (e.g. Retirement Allowance Act North Rhine-Westphalia – AltGG NRW)
- Federal Civil Servants Act (BBG)
- Civil Service Pension Act (BeamtVG)
- Explanations on § 5 and § 18 AltGG
Conclusion
The retirement allowance is an important part of the German civil service pension system that ensures old-age security for certain groups of former civil servants. The statutory provisions take into account special features of civil service employment, provide social security, and at the same time prevent overcompensation. Detailed knowledge of the eligibility requirements, calculation, and application process is crucial for affected persons in order to fully claim and assert their rights.
Frequently Asked Questions
What legal requirements must be met to qualify for the retirement allowance?
To establish a right to a retirement allowance, the relevant state law provisions are decisive, in particular the applicable retirement allowance act (e.g. the Retirement Allowance Act for federal civil servants or those of a federal state). The entitlement generally arises for civil servants, judges, or soldiers who leave the civil service or employment relationship before reaching the standard retirement age, without receiving a pension, and take up employment subject to statutory pension insurance or become self-employed. Among the legal requirements are, among others, at least five years of service (exceptionally three years in certain cases), the voluntary renunciation of civil servant status, and the timely application for the retirement allowance. There are strict deadlines and formal requirements, in particular an application must be submitted within a certain period after the end of the civil service relationship. It should also be noted that any entitlement to a statutory pension or a supplementary pension may affect or exclude the retirement allowance. In addition, statutory offsetting and suspension provisions are in place to prevent double benefits from public funds.
Can claims to retirement allowance lapse or become time-barred?
Yes, claims to a retirement allowance may lapse or become time-barred under certain legal conditions. The relevant retirement allowance laws require that an application for the retirement allowance must be submitted within a certain period after the end of the service relationship. If this period, which is often six months, is missed, the claim is irrevocably lost. In addition, general administrative law limitation and exclusion periods apply. Claims that are not asserted in time may be lost without exception. The time limitation relates to retroactive benefit periods, so benefits can generally be granted retroactively only up to the time of a timely application. In case of dispute, the provisions of the Administrative Court Procedure Code apply to further proceedings.
To what extent does a legal entitlement to a retirement allowance exist vis-à-vis the employer?
The retirement allowance is asserted as a legal claim against the previous employer once all substantive and personal requirements are fulfilled and the application is submitted on time. The legal basis is the relevant retirement allowance act, which grants former civil servants, judges, or soldiers an enforceable claim to payment of the retirement allowance. This claim is – unlike a purely discretionary benefit – strictly bound to statutory specifications and can, if necessary, be enforced through legal action. The employer is obliged to examine the application carefully and issue a decision that can be appealed. Objections and lawsuits against negative decisions are subject to the general provisions of administrative law and are subject to judicial review.
How is the retirement allowance calculated under legal provisions?
The calculation of the retirement allowance is governed by the detailed provisions of the currently applicable retirement allowance act. The relevant factors are the pensionable periods of service and pensionable remuneration accrued until leaving the service. The calculation formula is often based on the pension calculation system, but takes maximum limits and deduction provisions into account. Legally, periods of voluntary contributions, pension equalization, as well as any pension reductions must be offset accordingly. Any previous pension entitlements or civil service pension rights are included as far as they are legally relevant. Furthermore, the laws regulate the offsetting of other pension provisions and lead to a reduction or exclusion of the retirement allowance entitlement in the event of multiple claims.
What are the legal consequences of a later switch to statutory pension insurance for the retirement allowance?
Switching to statutory pension insurance or drawing benefits from it can have significant legal effects on the retirement allowance entitlement. According to statutory regulations, the retirement allowance is generally intended for cases where the former civil servant takes up a new occupational system after leaving. If a claim to a statutory pension arises later, the legislator usually provides for corresponding suspension or offsetting regulations. This is intended to prevent overcompensation and means the retirement allowance is paid only to the extent that it exceeds any pension entitlements. Further details are governed by the suspension provisions of the respective retirement allowance acts, including the beneficiary’s obligation to notify and the payment agency’s right of revocation in cases of overcompensation.
Is the retirement allowance subject to special tax regulations?
The retirement allowance is, in principle, subject to income tax like other pension or retirement benefits according to the Income Tax Act. Its tax treatment is specifically regulated: the retirement allowance is taxed as an annuity pursuant to § 22 no. 1 EStG, with a portion considered taxable income. The taxable portion depends on the commencement of retirement allowance payments and the beneficiary’s life expectancy. Tax exemptions or allowances, as applicable to civil service pensions, are accordingly applicable to the retirement allowance. Notification obligations to the tax office and correct declaration in the income tax return are legally binding. Special tax reduction rules apply in the event of double benefits.
Can legal remedies be lodged against decisions in the retirement allowance procedure?
In the event of negative or incorrect decisions in the retirement allowance procedure, applicants have access to legal remedies. Under the general provisions of the Administrative Procedures Act, it is possible to file an objection against the decision. If the objection is rejected, legal action can be brought before the competent administrative court. The proceedings are governed by the Administrative Court Procedure Code (VwGO), and deadlines for legal remedies must be strictly observed. Legal protection covers both the determination of the entitlement and the correct calculation and payment of the retirement allowance. Judicial proceedings often revolve around questions of the correct application of the retirement allowance acts and the observance of formal procedural requirements.
