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| Thanks Richard and just one more question. To organise this payment, is there any papers to be filled and approval of any organisation need to be obtained before the money is paid into the account. Ashish. | |
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Hi Ashish,
firstly, as a newbie you might not know the following: although it does not bother me instead of thanking in the post thank through the thanks button and or the reputation button. Some people might get a kick out of seeing lots of thanks against their name or a high reputation
I am assuming you are employed and not self employed. In that case you will receive every year, usually in June/July a statement from your pension fund showing your contributions and how much capital is available if you die, how much pension your decendents will receive, how much is available to buy a house and how much you can pay in. The last point is usually at the bottom. As a late starter it is calculated by assuming you have paid fully in at your current salary from the age of 25. Until 25 Risk (ie life assurance) is your only contribution (exceptions are possible but not the norm). This figure is usually noted as something like " BVG Einkaufssumme".
There are certain points you need to be aware of!
1. If you are intending to retire in the next 5 years AND take the sum from the pension fund as a capital payment then you need to be aware that this will be partially taxed - under these conditions it is viewed as a method to avoid paying tax.
2. If you have come from abroad and are starting a pension fund then you are restricted in the first 5 years to paying a maximum of 20% of your income.
3. If you leave the country within 3 years of making an additional payment then this money cannot be taken immediately but is held in a frozen account.
How do you do it. When you have a possibility to pay additional contributions you contact the fund and ask them for a payment slip to do this. Dependent on your situation this might be directly to the fund or through HR. You need to make the contributions before December of the year in order that they are registered as paid in that calendar year. Here proof of payment is not proof of receipt!
If on the other hand you are self employed then the world is completly different...