UK Teachers Pension puzzle

[Feierabend]

Good to see this replacement forum up and running, thanks!
This is a mixture of Finanzamt and Krankenkasse-generated puzzlement.
A) The FA has asked my Steuerberater if the TP is a state or private pension. I am certain it is not state, although as a teacher you were a compulsory member of the scheme. My P60 shows the taxable amount but as it is less than the tax free allowance in the UK I do not pay tax on my regular income from it there. I did pay some tax on the lump sum (in the UK) on first receiving it in 2019 .
B) Now, it seems that the Krankenkasse regards it as another kind of pension, neither state or Betriebsrente. Thus I pay the full whack of contributions on it (c 18%?) not the half rate as on my state pensions. Sometime last year I read that the Krankenkassen had reduced this rate on Betriebsrenten back to the lower rate. I queried why I was still paying the higher rate and they eventually replied that the TP is defined not as a Betriebs but comes under some other kind of classification that I didn't understand. (I'm hunting for their letter but can't find it.)
I of course declare the TP here. My Steuerberater is puzzled why the FA is suddenly asking - surely it's their job to know if it's private? That always rings alarm bells! And if it is private, why is the Kk not treating it as a Betriebs pension? The monthly contributions are horribly high and it's be great if they were wrong ....
Any elucidation much appreciated!

[GaryC]

The Teachers Pension (if you were teaching in the state system) is a Government Service Pension, taxing rights of which are governed by Article 18(2) of the UK/German double taxation agreement - see https://www.gov.uk/hmrc-internal-manual ... intm343040. As such it is taxable only in the UK unless you have German citizenship (sole or dual), in which case it would be taxable only in Germany. It is not a state (social security) pension, or private in the sense of a Self Invested Pension Plan or the like. I believe it is a contribution-based defined benefit (i.e. final salary) occupational pension scheme. I must admit, I find the translation of pension scheme types quite challenging as the regimes in each country are so difficult but I would have thought it comes within the meaning of Betriebsrente, even though it is also a Government Service pension for DTA purposes.

So far as it is taxable only in the UK it would of course feed into Progressionsvorbehalt in Germany.

I'll leave the others to comment on the KK side.

[Feierabend]

The Teachers Pension (if you were teaching in the state system) is a Government Service Pension, taxing rights of which are governed by Article 18(2) of the UK/German double taxation agreement - see https://www.gov.uk/hmrc-internal-manual ... intm343040. As such it is taxable only in the UK unless you have German citizenship (sole or dual), in which case it would be taxable only in Germany. It is not a state (social security) pension, or private in the sense of a Self Invested Pension Plan or the like. I believe it is a contribution-based defined benefit (i.e. final salary) occupational pension scheme. I must admit, I find the translation of pension scheme types quite challenging as the regimes in each country are so difficult but I would have thought it comes within the meaning of Betriebsrente, even though it is also a Government Service pension for DTA purposes.

So far as it is taxable only in the UK it would of course feed into Progressionsvorbehalt in Germany.

I'll leave the others to comment on the KK side.

Thank you so much, GaryC. This is so useful to get the correct terminology. I'll forward this to the Steuerberater.
It'd be great if I could get the Kk to recognise it as Betriebsrente ... one can only hope.

[GaryC]

I was looking at Paragraphs 6 and 7 of the link below for other reasons but it is interesting that the DRV considers the Teachers Pension to be a "Betriebsrente" for their purposes, as it is a pension scheme that was "contracted out" of the supplementary, second element of the UK state pension, i.e. the state earnings-related pension scheme (SERPS) or state second pension (S2P) as it was know over its lifetime.

https://rvrecht.deutsche-rentenversiche ... reich.html

I don't believe this changes the fact that it is, as a question of fact, a government service pension within Article 18(2) of the DTA for tax purposes but it might help in your dealings with the KK.

[Feierabend]

I was looking at Paragraphs 6 and 7 of the link below for other reasons but it is interesting that the DRV considers the Teachers Pension to be a "Betriebsrente" for their purposes, as it is a pension scheme that was "contracted out" of the supplementary, second element of the UK state pension, i.e. the state earnings-related pension scheme (SERPS) or state second pension (S2P) as it was know over its lifetime.

https://rvrecht.deutsche-rentenversiche ... reich.html

I don't believe this changes the fact that it is, as a question of fact, a government service pension within Article 18(2) of the DTA for tax purposes but it might help in your dealings with the KK.

Thank you again! I'll have another shot at the Kk with that information as they've just sent the yearly guestionnare about foreign income.

[Feierabend]

I was looking at Paragraphs 6 and 7 of the link below for other reasons but it is interesting that the DRV considers the Teachers Pension to be a "Betriebsrente" for their purposes, as it is a pension scheme that was "contracted out" of the supplementary, second element of the UK state pension, i.e. the state earnings-related pension scheme (SERPS) or state second pension (S2P) as it was know over its lifetime.

https://rvrecht.deutsche-rentenversiche ... reich.html

I don't believe this changes the fact that it is, as a question of fact, a government service pension within Article 18(2) of the DTA for tax purposes but it might help in your dealings with the KK.

Thank you again! I'll have another shot at the Kk with that information as they've just sent the yearly guestionnare about foreign income.

I've continued to investigate online and came across this judgement from a court in Hessen where the plaintiff seems to have successfully argued that the TP should be treated as a statutory pension and should therefore attract the lower contributions to the Kk.
https://www.sozialgerichtsbarkeit.de/node/175215
Would be very grateful to know if I have correctly understood. (I did proudly manage it in German but also put it through the translator!)

[GaryC]

Interesting. If I read that correctly, we end seem to up with the same pension being treated in 3 subtly different ways for tax, DRV and KK.

• 1 for tax the TP and CS, LGPS etc pensions are clearly Government Service Pensions covered by Article 18(2) of the DTA

• 2 for DRV the link from their site clear shows that they consider them to be comparable to Betriebsrenten and, importantly, for anyone covered by the grandfathering rules for survivor pensions, excluded from the Einkommensanrechnung as the fall in §18a Abs. 3 S. 1 Nr. 9 SGB IV and so are excluded from the "Alt"-Faelle.

• 3 for KK they are found by the court to be comparable to the German statutory pension

Unpick that lot - assuming I have read the court's decision correctly.

[Feierabend]

Interesting. If I read that correctly, we end seem to up with the same pension being treated in 3 subtly different ways for tax, DRV and KK.

• 1 for tax the TP and CS, LGPS etc pensions are clearly Government Service Pensions covered by Article 18(2) of the DTA

• 2 for DRV the link from their site clear shows that they consider them to be comparable to Betriebsrenten and, importantly, for anyone covered by the grandfathering rules for survivor pensions, excluded from the Einkommensanrechnung as the fall in §18a Abs. 3 S. 1 Nr. 9 SGB IV and so are excluded from the "Alt"-Faelle.

• 3 for KK they are found by the court to be comparable to the German statutory pension

Unpick that lot - assuming I have read the court's decision correctly.

Thanks again GaryC.
At the moment it's the Kk contributions which concern me most as that full amount on my TP is a hell of a lot more every month than on the state pensions.. If I could get them reassesed/repaid I would be a happy monkey!
It's clear from the TP P60 returns that it is taxable in the UK, otherwise I wouldn't be getting a P60, right? I understand the income is factored in to the Progressions- calculation here.
Cheers, will let you know if the Steuerberator agrees and if the Kk reconsiders given this judgement.

[GaryC]

Being taxed in the UK and getting a P60 is the default position until, and unless, HMRC issues the pension payer a NT tax code to authorise them to pay gross. But as the TP is on the list of Government Service pensions within Article 18(2), unless you have German citizenship, the UK retains the taxing rights, so being taxed on your TP under PAYE and feeding that into progression in Germany is the correct treatment.

[Feierabend]

Interesting. If I read that correctly, we end seem to up with the same pension being treated in 3 subtly different ways for tax, DRV and KK.

• 1 for tax the TP and CS, LGPS etc pensions are clearly Government Service Pensions covered by Article 18(2) of the DTA

• 2 for DRV the link from their site clear shows that they consider them to be comparable to Betriebsrenten and, importantly, for anyone covered by the grandfathering rules for survivor pensions, excluded from the Einkommensanrechnung as the fall in §18a Abs. 3 S. 1 Nr. 9 SGB IV and so are excluded from the "Alt"-Faelle.

• 3 for KK they are found by the court to be comparable to the German statutory pension

Unpick that lot - assuming I have read the court's decision correctly.

JUST HAD VERY GOOD NEWS FROM THE KK!!!
Using the legal judgement that I referred to previously, they have decided that the TP should be treated as a gesetzliche Rente, and accordingly I am to be repaid all the excess contributions since 2019. My contributions will now be 70€ less per month.
Am feeling very pleased with myself for battling through all the legalese. And thank you all for your helpfulness.