What will happen to the Riester pension? There is currently only one clear answer to this: it should be reformed. The pension insurance wants clarity – others are calling for a new way of private provision.
Berlin – The German pension insurance has asked the Ampel coalition to clarify the future of the Riester pension.
Consumer advocates insisted on a fundamental reorganization. The coalition of the SPD, Greens and FDP had announced a fundamental reform of the previous system of private old-age provision, but left it open as to how people can actually make provisions in the future.
“There are people who say: Riester is a good pension for me,” said the President of the German Pension Insurance Association, Gundula Roßbach, of the German Press Agency in Berlin. “For these people, the coalition agreement leaves open how things will continue.” The Federation of German Consumer Organizations does not consider the Riester pension to be sustainable. Riester “actually needs a new regulation” with good grandfathering, said the head of the federal consumer association, Klaus Müller, of the dpa.
Around 16 million Riester contracts
According to the Ministry of Labor, there were more than 16.2 million Riester contracts with government funding in Germany in the third quarter of 2021. Roßbach said that the Riester pension is mainly used by “important target groups” such as women with children and people with low earnings. “Here the coalition agreement leaves some questions unanswered.” Roßbach referred to the protection of existing Riester contracts announced in the coalition agreement. “But what happens to new applications? Do you want to allow further applications under the previous conditions? “
Müller called the plans set out in the coalition agreement disappointing. “At this point the coalition did not deliver what it could have delivered,” criticized Müller. Actually, all three parties would have recognized before the federal election that the current system of the Riester pension benefits the insurers far too much and the employees far too little, said the consumer advocate. Instead of real reforms, the coalition agreement would only contain test orders. That is not enough. “I’m sure that it works much better at the traffic lights,” said Müller.
Above all, Roßbach emphasized: “It is important that the conditions are clear.” The roughly 16 million Riester contracts correspond to more than a third of the working population. “We notice in our advice that people have many questions about their old-age provision.”
The pension insurance president said: “It is also open: What state commitment will there be in the future for products for which – unlike Riester pensions – the contributions paid are not 100 percent guaranteed?” The coalition had announced that it would be legally recognized wanting to examine private investment products with higher returns than Riester. The offer of a publicly responsible fund for private old-age provision is also to be examined.
Most of the previous Riester pension providers have chosen a classic insurance contract (more than 10.6 million), much less, for example, the variant via investment funds or a bank savings contract. The Riester concept is criticized, among other things, because of the high acquisition costs, sales costs and administrative costs that go to insurance companies and financial institutions. This significantly reduces the return in the long term.
Consumer advocate Müller demanded that employees need a simple, high-yield and low-cost pension product. In other countries, publicly organized share-based provision funds have achieved significantly better returns over the past few years than the insurance-based Riester pension model. A publicly organized fund is the right model. “It’s easier, it’s more profitable, it’s less expensive.” Labor Minister Hubertus Heil (SPD), Finance Minister Christian Lindner (FDP) and Economics Minister Robert Habeck (Greens) should sit down and focus on the employees. dpa
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