How Pensionfriend Helps Self-Employed Temporary Residents Become Permanent Residents in Germany

Your pension needs

By contributing 90 € per month to a Pensionfriend pension plan you can fulfill the requirements for a permanent residency and you'll have an estimated sum of 216.481 € at the age of 67.

Note: the alternative plan that is often recommended for self-employed in Germany is a Rürup pension plan. However, in order to get the required monthly guaranteed pension of  1.504,34 €  you would need to contribute about double the amount, namely 233 € per month after tax. If you're interested in a Rürup pension plan, speak to one of our advisors.

Next steps

• Determine if a Private Pension Plan is the right solution for you. 

• Sign up using this link and fill out the necessary information and see your pension options in your pension dashboard. 

• In your dashboard you can simulate your pension plan as well as book your free appointment to get all your questions answered.

• Use your Private Pension Plan to obtain proof that you meet the requirements needed to become a Permanent Resident in Germany. 

The Ausländerbehörde has already approved Pensionfriend's private pension plans as a means to achieve the minimum retirement target. In the unlikely case your solution is not accepted by the Ausländerbehörde, you can cancel the plan and get your first investments back. We charge a fixed fee of 250 € that is waved if the contribution is over 200 € monthly, and in the unlikely case you won't get approved. 

How to become a permanent resident in Germany?

Securing permanent residence in Germany is an important milestone for self-employed temporary residents, offering long-term stability, a better chance at a mortgage and other benefits. However, the process involves fulfilling specific requirements, including demonstrating adequate income in retirement. 

In this article, we will show how Pensionfriend offers you a great solution as a self-employed individual or freelancer in Germany seeking permanent residence, by helping you fulfill the pension requirements.

Note: that our solution can also help Blue Card Holders wanting to speed up their application to under 5 years. 

Understanding the Requirements

Permanent residence permits in Germany are granted subject to varying criteria depending on your status. Self-employed or freelancing temporary residents fall under a specific category and must fulfill specific prerequisites. These include:

1. possessing a temporary residence permit for at least five years,

2. having an adequate command of the German language (B1 level),

3. demonstrating basic knowledge of the legal and social system in Germany,

4. ensuring secured means of support from personal income, and

5. having sufficient health insurance coverage.

One additional crucial requirement is proving old-age provision. According to the regulations applicable in 2024, self-employed and freelancers must, upon reaching the age of 67, either receive a monthly pension of 1.504,34 € (for a minimum of 12 years) or possess assets totalling 216.481,00 €, to obtain their permanent residency in Germany.     

How can you fulfill this requirement?

If you don't have a partner with a pension then there are three solutions:

1. A public pension: 
   As a self-employed or freelancer in Germany you can nearly always contribute voluntarily to the public pension. You will have to contribute 18,6 % of your income. The expected return on this contribution is on the order of 2 - 3 % if you are in the age range of 20 - 40, which is much less than alternative investments like a Private Pension Plan. If you are older (typically over 55) it can be an attractive option as the rate of return improves and it gives you a pension that is de facto indexed to inflation, but for the purpose of obtaining a PR it is impossible to obtain the required minimum pension. Even if you earn the maximum eligible amount of about 90.600 €, you would have to contribute for almost 19 years to get to the required pension.   

2. A Rürup or basic pension:
   This is the standard solution many self-employed in Germany embrace as the contributions can be deducted from tax. However, instead taxes have to be paid in retirement, and most importantly you are forced to take out a very costly annuity in retirement. You typically get a guaranteed pension of about 5.280 € for every 10.000 € paid in. The reason this is so poor is that your money is no longer well invested, the insurance companies keep a lot of money in reserve as many people who take out such annuities grow relatively old, and they charge cost. You also cannot take out the money invested, and it cannot be inherited. Therefore we do not recommend this solution. We can offer this solution if you really want it, but we would argue that you can do better.

3. A Private Pension Plan:
   This offers by far the best pension for the lowest contribution, as we invest with high returns (an expected return of 8,30 %) and low cost of 0,79 % annually. For portfolios over 250.000 € the overall fee declines to 0,59 % and over 500.000 € the overall cost is 0,49 %. We do not charge up-front costs or any exit costs. This program allows for maximum flexibility. You can take out the assets for example if you decide to leave Germany. Even better, you can also use the assets as collateral in case you want to buy a house! In this way you can achieve both your permanent residency, have a great start at building a pension, and a great start towards owning a home!

Note: If you are lucky and have a partner with a good pension that may be enough! Is your partner likely to build up a pension of about 1.400 euros? Then that may be enough. We have asked the Ausländerbehörde to confirm, but they say that it is always a case by case decision if you want to use your partner's pension provisions to apply for your permanent residency. Your case worker might still request that you have a pension on your own. You can use our public pension calculator to calculate the predicted pension of your partner.

Pensionfriend’s Role

1. Expert Guidance: Pensionfriend provides expert guidance throughout the entire pension fulfillment process. Our team of professionals speaks English and specializes in the German pension system, ensuring accurate information and personalized advice. We quantify the best solution to meet the specific needs of self-employed individuals seeking residency.

2. Assessment of Public and other Pension build-up: We can help you assess if you could and should build up a public pension, and what the best solution is in your case.

3. Documentation Assistance: Preparing the necessary documentation to prove your expected pension is important. Pensionfriend provides an official document with the expected value of your assets at the time of retirement.

Conclusion

Obtaining permanent residence in Germany as a self-employed temporary resident involves meeting various prerequisites, including the demonstration of an adequate income in retirement. Pensionfriend serves as an invaluable solution by offering expert guidance, the best solutions, and documentation assistance. By utilizing the services provided by Pensionfriend, self-employed individuals can navigate the pension requirement with confidence and increase their chances of obtaining permanent residence in Germany.

The simple bottom line of our advice is that our Private Pension Plan requires about half the  contribution of the much touted Rürup solution. In addition you can use our solution later as collateral to help you purchase a home.