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State-subsidized Riester pension: Subsequent reduction of the agreed pension entitlement ineffective
Photo: Jens Büttner/ picture alliance/ dpa
A subsequent reduction of an agreed Riester pension by the insurance or fund provider is ineffective: The Cologne Regional Court decided on the action of a Riester saver who had sued against the unilateral reduction of his pension entitlement by Zurich Deutscher Herold.
The disputed clause is not effective, the judges ruled (Az.: 26 O 12/22).
The insured person saves with a unit-linked Riester pension.
About a year ago he complained about the reduction in his later pension payment and received support from the citizens' movement Finanzwende.
The employee has been paying into a unit-linked Riester pension scheme under the Förder Renteinvest
tariff since 2006
.
In 2017, however, the provider Zurich Deutscher Herold unilaterally reduced the so-called pension factor.
The pension factor determines how much monthly pension a customer receives per 10,000 euros of capital saved, with a pension factor of 30, for example, 30 euros.
The consequence of the reduction in the above case: For every 10,000 euros of capital saved, the customer should now only receive 27.97 euros from the start of the pension instead of the 37.34 euros agreed in the insurance policy.
This corresponds to a pension reduction of almost a quarter.
The Riester saver did not want to accept this cut in his later pension.
Added to this was the uncertainty as to whether the insurer would make further cuts by the time pension payments start in 2039.
Zurich had justified its move with the permanently low interest rate level on the capital market.
Clauses for subsequent reduction of the pension factor ineffective
The Cologne district court ruled that the customer should rely on the pension factor agreed in the insurance certificate.
Even if this information was not provided with the word "guarantee" in the contract.
A clause on the unilateral reduction of the pension factor disadvantages the customer and is ineffective.
This means that the insurer is not allowed to cap their customer's Riester pension in the future either because of the clause: this is of great importance for Riester savers, especially in the case of long-term Riester contracts.
In the opinion of Finanzwende, the success in court has a signal effect – both for the providers and for thousands of policyholders.
Because the dispute is also about the fundamental question of whether insurers are allowed to subsequently reduce an originally agreed pension, for example due to low interest rates on the capital market.
The association Finanzwende points out that many pension insurance policies at Zurich and other insurance companies contain similar clauses.
In recent years, some large insurers have subsequently trimmed agreed Riester pensions.
Finanzwende estimates that tens of thousands of insured persons nationwide could be affected by pension cuts.
For this reason alone, the significance of the legal dispute extends far beyond the Cologne individual case.
"This judgment is encouraging. We are pleased that the Cologne Regional Court supports our view that the pension reduction in the case of the Cologne customer was not lawful," says Britta Langenberg, pension expert for the Finanzwende citizens' movement.
"Especially with government-subsidized pension contracts, the rules of the game must be fair and understandable for customers."
It is unacceptable for insurers to repeatedly resort to complicated clauses in the small print when in doubt.
The regulation of Paragraph 163 of the Insurance Contract Act therefore gives the insurer "no power to adjust in the event that the insurer generates lower investment income than it calculated when setting the technical interest rate," according to the judgment of the Cologne district court.
The verdict is not yet legally binding.
The Zurich Deutscher Herold can appeal against this.
The citizens' movement Finanzwende is a non-partisan association with over 7,500 members.
The organization was founded in 2018 to mark the tenth anniversary of the Lehman Brothers bankruptcy.
The financial turnaround has been critical of the state-sponsored Riester pension for years - for example with a study on the disclosure of Riester costs.
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