The name “Riester” Alexander Kihm can no longer hear. “I’d prefer to do away with it,” says the 31-year-old. It is not Kihm Riester haters. Anyone who listens to the doctoral industrial engineer who experiences as an evangelist FörderRente with which the Germans should be encouraged to save for their old age. “The Riester pension is incredibly well made in detail,” he enthuses
Kihms problem. He has not only the case but also the term “Riester” prescribed. 2013, he and two colleagues, the start-up Fairr.de. “Fair Riester” they call their simple, affordable Riester product. Today, even the word “fair” is no longer save the situation. “The Image of Riester is broken,” says Kihm. Many people are now so insecure that they prefer anything made.
Ever since Bavarian Prime Minister Horst Seehofer (CSU) explained the product to have failed, it is released for scrapping. Labour Minister Andrea Nahles (SPD) disagreed rather halfheartedly. One can not simply “failed” by talking. But the lofty expectations that the early 2000s were associated with the Riester pension – which have not been redeemed. Also Nahles call for action. Too bad that there are already more than 16 million contracts with respective hopes. The owners are wondering what will happen to their retirement. Three scenarios were possible.
1. Running blank
Experts agree: a private funded pension is important. And also on the basic design of the Riester pension there is little to complain about. Especially for low , which threatens to slip into poverty in old age, the instrument is just made. Because government subsidies worthwhile for them particularly. In addition to the basic allowance of 154 euros there is for each born after 2008 child again 300 euros on top.
For high earners, the tax benefits are attractive, which in itself can add up annually to almost 900 euros (maximum subsidy rate of 2100 Euro times marginal tax rate of 42 percent). According to the Institute for pension and financial planning (IVFP) bring alone allowances and tax benefits at least 3.5 to four percent return.
So there are those who reject any intervention in today’s Riester pension. It is often argued principle: Every intervention qua law destroyed the confidence of depositors. If applied for decades to project how the pension could not after 15 years to change everything again one. Especially as a possible return Bringer after such a short time still can not work: In the coming decades, Riester savers would alone benefit from the insured die earlier than assumed by the providers
For the calculation of the annual pension payment providers assume a certain life expectancy. If the insured dies earlier, go 90 percent of the no longer necessary payments by law to all customers. Since most of the Riester savers is still some way off after a maximum of 15 years of contributions from retirement, this money source can not gush.
. 2 Repairing / rebuilding
The basic structure may be stable, but the problem is the individual products, in which the money of savers flows. Often the cost of feed on the allowances, in some types of contracts, the fees exceed even the grants. For the cost savers get little offered. Many products deliver in the face of ongoing charges just in zero interest rate environment no longer returns. After all, there is a so-called premium guarantee. At retirement, at least the premiums paid including the allowances in the savings pot to be.
“It is not the idea that is false, it is the bad products” says IVFP CEO Thomas Dommermuth. He holds half the Riester deals bad, one-third he calls even “junk”. Only ten to 15 percent of the vendors are very good. He advises in particular on Riester insurance, which account for the majority of policies sold. Most policies are expensive and at the same time yield weak and would rather the financial industry strengthen as retirement.
On the other hand he breaks despite zero interest rates the cudgels for bank savings plans, by low cost notice. “In low-interest periods savers must favor contracts with low fees. The return is very controlled by the costs,” says Dommermuth.
However, the parlous state returns are also a result the policy which would protect savers necessarily against losses. Through a mandatory contribution guarantee the provider can not create alone where it the best long term return on promises but low risk to invest the money of depositors. In the premium guarantee the policy could savers can choose whether they play it safe is best to play and in return, waive some yield points or invest their money up to 100 percent in equities and possibly make losses. History shows that it is precisely in long-term savings processes shares are the most profitable asset class.
Correction is also needed in the payout phase. Riester savers are allowed to withdraw a maximum of 30 percent of the accumulated sum at once to retirement namely. The rest must be converted into a pension. This task is performed by an insurer – irrespective of whether you have a bank savings plan, a fund solution or chosen from the foundation insurance
The Federation of insured revolts since. a long time on “far too high biometric costs,” said board member Axel Kleinlein. He said the amount allowed by the providers cost of a long life. The annuity that guarantees a monthly payment from the age of 85, is worth many times only if the customer is almost 100th “Insurers have failed as a partner,” says Kleinlein. He wants the private financial sector therefore partially pushing out of the state-funded pension.
Consumer advocates call for less and cheaper products. In addition, the transparency is expected to grow over all costs. Every citizen should receive a pension account all pension products. So he can see at any time how much of the buffer for old age. The German Pension Fund Baden-Württemberg has brought such an account into play already a few years ago. You want the account not only perform, but also themselves impart Riester products, but without high sales commissions. In the same vein, the brought into play by the Hessian state government Germany pension goes. Again, the idea that the state pays the hitherto customary for Riester supplements.
As part of the reconstruction work is discussed, whether one is driving people to precautionary , Many see it as a birth defect of the Riester pension, that people have to be convinced of active or zealous advisers of itself. The concept of the Germany-pension provides that everyone pays – unless he opts against. This saves distribution costs, proponents say. Such opt-out could be noisy Dommermuth perform in Germany within two years to a participation rate of 80 to 90 percent.
. 3 Scrap
of restitution The Riester pension and for strengthening the state pension is legally tricky. Although the law stipulates that savers contracts were concluded and the money can cash out. But then the state demands back all allowances and tax savings. In addition, the seller may deduct his costs. This can lead in the extreme case that the customer receives less after termination, he must pay back allowances. Moreover, the question arises on the amounts withheld by providers and independent financial services commissions.
In a reversal of commissions and other costs could hardly be imposed on savers. The pension companies should protest against the cost of acquisition. In addition, the state would intervene indirectly in private contracts. A gentle way of unwinding would be if all future Berlin allowances sweeps – the stimulus by Riester savings would be gone. For this, however, the Income Tax Act should be amended, which regulates the allowances practice. This is unlikely.
So what do with the old contract? Where it appears that it is expensive and inflexible, savers should act – but wisely. “Better than terminate is to provide the contractual contributory” says BdV man Kleinlein. Then the saver enters into a new, better treaty. Advantage: The guarantee that the old contract for retirement at least all posts and allowances are still there remains. This route is preferable also intended by the legislature change procedure: Each must take his previously piled capital to a new supplier. However, the old contractor pulls before nor from its cost. Say, the new treaty could arrive less than the customer was actually promised. The best are still policies savers the first hours there: By 2004, the guaranteed interest rate of 3.25 percent. In addition, the mortality table was saver friendly. Customers then have so far not be as old as today, so that the insurance expects for them.
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