Riester pension not sustainable - traffic light is missing out on real reforms

Created: 01/06/2022, 7:29 PM

From: Felix Busjaeger

Riester pension facing an uncertain future.

Consumer advocates see traffic lights as an obligation.

© Alexander Heinl / dpa

Riester pension an important part of old-age provision: consumer advocates do not consider the system to be sustainable - the traffic light meanwhile relies on examination procedures.

Berlin - what's next for the 2022 pension?

After the new federal government made up of the SPD, Greens and FDP announced the future of the statutory pension * in its coalition agreement, experts see a particular need to catch up in private pension provision.

Consumer advocates had complained that the Riester pension was not sustainable and that a new regulation was needed with a grandfathering.

The five-point plan set out in the coalition agreement for the traffic light * pension in 2022 is disappointing, said the head of the federal consumer association, Klaus Müller, of the German press agency.

"At this point, the coalition did not deliver what it could have delivered," he criticized.

Pension 2022: New regulation of the Riester pension - German pension insurance calls traffic light for clarification

While the consumer advocates insisted on a new regulation of the Riester pension, the German Pension Insurance has called on the traffic light coalition of Federal Chancellor Olaf Scholz * (SPD) to clarify private pension provision.

"There are people who say: Riester is a good pension for me," said the President of the German Pension Insurance Association, Gundula Roßbach, in Berlin.

It is open to these people how things will continue with regard to the 2022 pension - the coalition agreement does not provide any information on this.

The Federation of German Consumer Organizations does not consider the Riester pension to be sustainable. 

Unlike the consumer advocates, who see a particular need to catch up in private old-age provision, the CSU advocates strengthening young people and, in addition to a stronger single parent's pension *, also calls for a generation fund in which the basis of old-age provision is saved.

For more equality of opportunity, the Ampel-Koalition wants to rely on basic child security *, which should ensure less child poverty in Germany.

Riester pension is very popular - more than 16.2 million private pension contracts

The Riester pension has a long tradition in Germany and is very popular nationwide for private pensions.

As the Ministry of Labor announced for the third quarter of 2021, there are currently more than 16.2 million Riester contracts with state funding in Germany.

This compares with 45.3 million people in employment (as of November 2021).

While the baby boomer generations are about to retire *, pensioners can expect golden years for their retirement * in the future.

The Riester pension is mainly used by "important target groups" such as women with children and people with low earnings, according to Roßbach.

She sees the uncertain future of private old-age provision as problematic: although the coalition agreement provides for old contracts to be protected, it is not clear how it will look for new applications.

Retirement provision and pension 2022: Demand for Riester pension is falling

About 20 years after its introduction, the Riester pension seems to have had its day as a pension.

Named after the former Federal Labor Minister Walter Riester (SPD), it was originally intended to appeal to a significantly larger part of the population.

But since 2015 at the latest, the number of contracts had peaked.

Since then, things have been going downhill.

Politicians had also recognized this in the run-up to the federal election in 2021 and proclaimed a strengthening of old-age provision and the pension in 2022 as an integral part of their first legislative period during the election campaign.

Meanwhile, new regulations will apply to mini-jobs from 2022 *.

For Verdi, this lurks a threat to retirement *, old-age provision and retirement.

In the opinion of consumer advocate Klaus Müller, it was already clear to the current traffic light parties, the SPD, FDP and the Greens, that the current system of the Riester pension would be of far too much use to the insurers and far too little to the employees.

Nevertheless, the coalition agreement would only contain test orders and no real reforms.

That is not enough.

"I'm sure that it works much better at the traffic lights," said Müller.

Meanwhile, some retirees still have to work part-time in their old age in order to make ends meet with their 2022 * retirement.

German consumer association: simple, high-yield and low-cost pension product for retirement in 2022 and beyond

The head of the Federation of German Consumer Organizations is therefore in favor of a simple, high-yield and low-cost pension product for employees who will retire in 2022 and beyond.

Examples of how this could be achieved would be provided by other countries.

In the past few years, they had achieved significantly better returns with publicly organized equity-based pension funds.

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Müller therefore considers a publicly organized fund to be the right model.

"It is easier, it is more profitable, it is less expensive." to put the workers first and find a solution.

Lindner had already announced that in future contributions to pension insurance can be fully deducted from tax *.

Private old-age provision: great need for action in the case of Riester pensions

In Müller's view, the need for action in private old-age provision, such as the Riester pension, is significantly greater than in the case of company old-age provision or the statutory pension.

It is important to Gundula Roßbach that the conditions are clear for everyone involved.

"We notice in our advice that people have many questions about their old-age provision," said the President of the German Pension Insurance.

It is also unclear what state replacement there will be in the future for products for which the contributions paid cannot be 100 percent guaranteed.

Markus Söder (CSU), on the other hand, advocates the introduction of a youth pension * for secure old-age provision.

(With material from dpa) * Kreiszeitung.de is an offer from IPPEN.MEDIA.