What is Rürup pension and when is it worthwhile?

The Rürup pension (officially Basisrente) was introduced to give self-employed people a tax-supported retirement option similar in deductibility to statutory pension contributions. Each year, contributions reduce your taxable income up to a defined cap, which can produce significant immediate tax savings — particularly for high earners.

The catch is the rigidity. The capital you put in is essentially locked away until retirement: payouts are only available as a lifelong monthly pension, you cannot take a lump sum, the contract is not transferable, and it is not inheritable in the normal sense (limited inheritance options exist for spouses and minor children). Contributions can be paused but not refunded.

There are two main flavours on the market. Investment-linked Rürup contracts (often built on ETFs) can offer reasonable long-term returns and are usually preferred where Rürup makes sense at all. Classic guaranteed Rürup contracts tend to look weak after their costs are accounted for.

For expats specifically, two questions matter most before signing. First: are you confident enough that you'll stay in Germany long enough — or at least retire under conditions where this contract still pays out usefully — that locking capital makes sense? Second: is the immediate tax saving in your bracket genuinely large enough to justify giving up the flexibility?

For high-income self-employed expats with stable, long-term German plans, Rürup can be a meaningful building block alongside more flexible investments. For shorter-term residents or anyone whose tax bracket isn't high enough to make the deduction work hard, it is usually not the right product.