Parliament backs pension changes

29th April 2004, Comments 0 comments

29 April 2004 , BERLIN – The German parliament Thursday backed plans to change tax rules for pensions after the country's highest court decreed two years ago that benefits paid civil servants were at disadvantaged compared to ordinary pensions.

29 April 2004

BERLIN – The German parliament Thursday backed plans to change tax rules for pensions after the country's highest court decreed two years ago that benefits paid civil servants were at disadvantaged compared to ordinary pensions.

The changes, passed by the lower house of parliament, the Bundestag, mean that Germany will start taxing pension payouts from next year and at the same time begin phasing out levies on workers' monthly contributions.

Today's decision is the second affecting pensions German lawmakers have taken in two months as the pay-as-you-go pension system faces the dual burden of rising life expectancy and a shrinking workforce.

With Germany's state pension system hit by arising deficit, falling tax receipts and a greying of the population, the government has embarked a round of reforms in a bid to shore up its finances.

In a controversial move last month, Parliament agreed cuts in state pension benefits and to extend the contribution period.

Under the legislation passed Thursday, contributions by companies and workers to life-insurance schemes will enjoy tax-free status by 2025.

Rules which currently mean that pension payouts are tax-free will be dropped by 2040. The changes are also expected to receive the go ahead by the opposition-controlled upper house of parliament, has Bundesrat.

[Copyright Expatica News 2004]

Subject: German news

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