All about this insurance: Private pension
Should I take out a German private pension if I might leave Germany?
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How is the surrender value of a German pension policy calculated?
In short
The surrender value (Rückkaufswert) is the reserve your contract has built up, minus an agreed cancellation charge. In the first years it is below your premiums, because acquisition and sales costs are taken first. German law requires these costs to be spread over at least five years for this calculation, which protects you from losing almost everything early on.
What it costs
Figures from German law, regulation and published market data, September 2026.
| Example | Typical range |
|---|---|
| Acquisition and sales costs, legal cap | at most 25 per mille, meaning 2.5 percent of total premiums |
| Minimum surrender value, spreading of these costs | evenly over the first 5 contract years |
| Guaranteed interest for new contracts since 2025 | 1.0 percent |
| Current interest, market average 2026 | 2.6 percent, range 1.95 to 3.6 percent |
| Cancellation charge in newer contracts | usually 0 to 3 percent of the reserve |
| Example contract after 2 years, 2,400 euros paid in | about 1,930 euros surrender value |
The 2.5 percent cap, the five year spread and the interest figures come from law, regulation and published market data. The cancellation charge of 0 to 3 percent and the administration costs in the example are guide values from our quoting practice. Your contract may differ; your insurer gives you the binding figure in writing.
Worked example
100 euros a month, 30 year term, cancelled after five years
How the gap between premiums and payout arises. Calculated with 2.6 percent interest and costs at the legal cap.
| Total premiums (360 × 100 euros) | 36,000 euros |
| Acquisition costs, 2.5 percent of that | 900 euros |
| Spread over five years | 180 euros a year |
| Administration, guide value 5 percent per premium | 60 euros a year |
| Paid in after five years | 6,000 euros |
| Reserve after five years | about 5,120 euros |
| Cancellation charge 2 percent | about 100 euros |
About 5,010 euros are paid out, so almost 1,000 euros short of 6,000. In the same contract the surrender value is about 11,650 euros after 10 years (12,000 paid in) and about 27,800 euros after 20 years (24,000 paid in). Only after about eleven years does it turn positive.
What the surrender value is made of
Only part of each premium goes into savings. The rest covers acquisition and sales costs, ongoing administration and, in some contracts, a small amount of death cover.
The savings part earns interest and forms the reserve (Deckungskapital). That is the pot your pension would later be paid from, and it is the basis if you cancel.
Surplus already allocated to you is added. An agreed cancellation charge is deducted. What remains is paid out.
| Component | Effect on the surrender value |
|---|---|
| Reserve | the basis, grows with each premium and with interest |
| Allocated surplus | increases the value, it is yours for good |
| Terminal bonus | on cancellation usually only in part or not at all |
| Acquisition and sales costs | reduce the first years strongly, later hardly |
| Cancellation charge | reduces the payout, often 0 to 3 percent |
| Unpaid premiums and loans | are deducted before money is paid |
Why the first years bring so little
Signing a contract creates one off costs for advice and processing. Many insurers take them from the first premiums instead of spreading them over the whole term. This is called Zillmerung.
The amount is capped at 25 per mille of total premiums, meaning 2.5 percent of everything agreed. With 100 euros a month over 30 years that is at most 900 euros.
For the surrender value the insurer must calculate at least as if these costs were spread evenly over five years. The costs are still real, though: cancel after two years in the example below and you get back about 1,930 of 2,400 euros.
What the cancellation charge may and may not do
A charge on cancellation is allowed under three conditions: agreed in the contract, stated as a figure and reasonable. A clause that only mentions a reasonable charge is not enough.
A charge for acquisition costs not yet repaid is expressly not allowed, because those costs are already in the reserve calculation.
In newer contracts the charge is often between zero and three percent. If your documents show no figure, it is worth asking.
Surplus and terminal bonus
New contracts since 2025 guarantee 1.0 percent again. On top comes surplus participation; the market average for current interest in 2026 is 2.6 percent, ranging from 1.95 to 3.6 percent.
What has been allocated is yours and is part of the surrender value. The terminal bonus is different: it is paid at the end of the term and is usually lost in part or in full if you cancel early. Always ask for two numbers: the surrender value today and the maturity value at the agreed date.
If you are leaving Germany
A move abroad changes nothing about how the surrender value is calculated. It does change what cancelling costs you in tax, because your new country may tax the gain as well.
Before you cancel on your way out, compare with making the contract paid up. The contract can usually stay, and the surrender value keeps growing.
Step by step
- Ask in writing for the current surrender value and the maturity value.
- Check whether a cancellation charge is agreed as a figure in your contract.
- Find out how much terminal bonus you would lose.
- Add up your premiums and compare.
- Plan for tax on the gain if age or term conditions are not met.
- Compare with making the contract paid up, lowering or deferring premiums.
- Only then decide and cancel in writing.
Checklist
- Surrender value and maturity value in writing
- Cancellation charge stated as a figure and checked
- Loss of terminal bonus quantified
- Guaranteed interest of the contract known
- Total premiums paid calculated
- Tax on the payout checked, in Germany and in a new country of residence
Common mistakes
- Confusing the surrender value with total premiums paid
- Cancelling shortly before maturity and losing the terminal bonus
- Ending an old contract with a high guaranteed rate for short term cash
- Accepting a cancellation charge although no figure is in the contract
Questions and answers
Frequently asked
Why do I get back less than I paid?
Because acquisition and administration costs have already been used. They are spread over the first five years, then interest slowly closes the gap.
May the insurer charge a cancellation fee?
Yes, if it is agreed, stated as a figure and reasonable. A charge for acquisition costs not yet repaid is not allowed.
Is the surrender value guaranteed?
The guaranteed part and allocated surplus are. Future surplus is not. With unit linked contracts the value follows the funds.
How quickly is it paid?
Usually within a few weeks after the cancellation arrives. Ask for a calculation first so you see the number before deciding.
Do I pay tax on the surrender value?
Only on the gain above your premiums. In the early years there is often no gain and no tax.
Sources
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