A cross-party consensus is building in Germany regarding the taxation of direct insurance policies, with both the conservative CDU/CSU bloc and the left-leaning Die Linke party calling for an end to what they describe as double contributions to statutory health and care insurance.
Simone Borchardt, health policy spokesperson for the CDU/CSU parliamentary group, highlighted the perceived unfairness of the current regulations impacting direct insurance and company pension schemes. She argued this lack of legislative reliability erodes public trust in politics and discourages private retirement planning. Since 2005, these supplementary retirement provisions have been subject to contributions upon payout, a change applied retroactively to existing contracts initially funded from income already subject to social contributions.
The “Verein Direktversicherungsgeschädigte e.V”. (Association of Direct Insurance Policyholders) estimates that 6.3 million individuals are affected by this “double contribution” which they claim amounts to approximately one-fifth of the accumulated savings during the payout phase.
Borchardt stated that individuals taking personal responsibility for their retirement should not be penalized through double taxation. She pointed to agreements within the coalition contract between the CDU/CSU and SPD, outlining improvements to the framework surrounding supplementary pension provisions, framing the issue of double contributions as a key test of this commitment. “Our goal is clear: preventative measures must once again be worthwhile” she stated, emphasizing the importance of allowing individuals to maintain their living standards in old age.
Sarah Vollath, spokesperson for pension and age policy for Die Linke, echoed these concerns, labeling the double taxation of company pensions and direct insurance a “political error”. She asserted that millions of citizens who responsibly planned for their retirement are now facing unexpected burdens during payout and that the current system actively diminishes trust in the legislature.
Vollath proposed a “just solution” for direct insurance, acknowledging the positive impact of a 2019 introduced exemption, but arguing it doesn’t fully address the problem. Her party suggests contribution-free payouts, expanding the exemption to include care insurance, halving contribution rates for company pensions above the exemption threshold and guaranteeing full protection for contracts established before 2004. She emphasized that funding gaps within statutory health insurance should not be plugged at the expense of individuals who have proactively saved for their retirement, arguing that the social state should serve its citizens, not penalize them for responsible financial planning.