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What is profit participation in German pension insurance?

In short

What is profit participation in German pension insurance? It is the share of profits (Überschussbeteiligung) the provider passes on to you on top of the guaranteed interest. For 2026 the current interest rate ranges from about 1.8 to 3.5 percent depending on the company, around 2.6 percent on average. Only what has already been credited is guaranteed.

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What it costs

This is about interest rates, not prices. Figures for 2026 from published market overviews.

Example	Typical range
Guaranteed interest for new contracts 2026	1.0 percent
Current interest 2026, lowest to highest in the market	about 1.8 to 3.5 percent
Current interest 2026, classic private pension insurance, average	about 2.6 percent
Total interest including terminal bonus, average	about 3.2 percent

As of October 2026.

Profit participation is set again each year and is not guaranteed for the future.

The EUR 90 savings part in the example is a guide value from our quoting practice (Richtwert aus der Angebotspraxis).

Worked example

EUR 100 a month, 30 years of saving

What the difference between guarantee and profit participation makes if interest stayed the same over the whole period.

Monthly premium	EUR 100
Savings part after costs (guide value)	about EUR 90, so EUR 1,080 a year
Guaranteed interest only, 1.0 percent	around EUR 37,600
With current interest of 2.6 percent	around EUR 48,200

Profit participation adds a good EUR 10,000 here, more than a fifth of the balance. But only around EUR 37,600 is guaranteed.

Where the profits come from

German providers calculate cautiously: low interest, long life expectancy and generous costs. If things go better, a surplus arises. It comes from three sources: higher investment returns, lower costs than planned and the risk result, for example when fewer policyholders die or need care than expected.

A German regulation requires that most of these surpluses go to policyholders. How much your contract receives is set by the company again every year.

Component	What it means	How safe
Guaranteed interest (Garantiezins)	fixed rate on the savings part, 1.0 percent for new contracts	guaranteed for the whole term
Current profit participation	annual credit above the guaranteed rate	safe once credited, open for the future
Terminal bonus (Schlussüberschuss)	bonus at the end of the savings phase	only safe when your pension starts
Valuation reserves (Bewertungsreserven)	share of hidden reserves in the investments	moves with the capital markets

Current interest and terminal bonus

The current interest rate (laufende Verzinsung) is the figure providers announce each year. It contains the guaranteed rate plus the current profit participation. It is credited to your contract annually and cannot be taken away afterwards.

The terminal bonus is only added at the end and can be cut until then. If you cancel early, you usually get only part of it or nothing. That is why total interest (Gesamtverzinsung) is higher than current interest, but also less certain.

How the profits are used

During the savings phase, profits usually increase your balance. Some contracts invest them in funds or offset them against your premium. Your contract documents say which applies.

When your pension starts, you often choose between a pension that rises every year and a higher starting pension that grows less. The higher starting pension is not guaranteed and can fall if profits drop.

Limits and when you do not need this

The interest applies only to the savings part. Acquisition and administration cost money, so of a total interest of around 3.5 percent often only about 2.5 percent remains after costs. High profit announcements mean little if costs are high.

If you might leave Germany, do not need a lifelong guarantee and can live with market swings, your own ETF savings plan may bring more. Classic pension insurance with profit participation suits people who value security over return.

Step by step

Check your annual statement (Standmitteilung) for the interest your contract receives.
Look at the guaranteed balance and the non-guaranteed parts separately.
Before cancelling, ask how much terminal bonus you would lose.
When your pension starts, choose the form of the bonus pension deliberately.
For a new contract, compare costs, not just the interest rate.

Checklist

Guaranteed and current interest found in the annual statement
Amount of terminal bonus and valuation reserves known
Effective costs of the contract checked
Pension form clarified: rising or higher start
Comparison with your own savings plan calculated

Common mistakes

Taking projections that include profits for guaranteed values
Cancelling shortly before the end and giving away the terminal bonus
Comparing only the interest rate and overlooking costs
Choosing the higher starting pension without knowing it can fall

Questions and answers

Frequently asked

Is profit participation guaranteed?

No. Only what has already been credited is guaranteed. For future years the provider sets the amount again every year.

What is the difference between current interest and total interest?

Current interest is credited every year. Total interest adds the terminal bonus and valuation reserves, which are only safe at the end.

Why is my pension lower than in the projection?

Projections made years ago assumed higher profits. If these fall, the non-guaranteed pension is lower too.

Can the bonus pension fall once it is being paid?

Yes, the non-guaranteed part can fall, especially with the higher starting pension option. The guaranteed pension stays.

What happens to profits if I leave Germany?

Credited profits stay in your contract. Whether you can keep it running from abroad depends on the provider, so ask before you move. If you cancel instead, credited profits are part of the surrender value, the terminal bonus is mostly lost.

What happens to profits if I cancel?

Credited current profits are included in the surrender value (Rückkaufswert). Of the terminal bonus you usually get only part or nothing.

Sources

NAMMERT insurance broker

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