The insurers want a subsidized old-age provision with simpler subsidies, more flexible guarantees and an annuity for life.
(Photo: dpa)
Frankfurt, Munich The insurance industry had long campaigned for a reform of the Riester pension. However, since this is becoming increasingly unlikely, the insurance association GDV is now trying to get its voice heard in politics with a new concept for state-subsidized private old-age provision.
“We will bring our proposal for a citizens’ pension into the discussion: a subsidized old-age provision with simpler subsidies, more flexible guarantees and a lifelong pension,” said GDV General Manager Jörg Asmussen to the Handelsblatt. The reason for the official presentation of the concept is the newly formed focus group on private old-age provision, which meets for the first time on Tuesday under the leadership of the Federal Ministry of Finance.
It is good that the dialogue on private old-age provision is now beginning, Asmussen continued. “The subsidized private old-age provision can be reformed and deserves a reform – quickly and with an eye to the real needs of the citizens.”
The current system is around 20 years old and has not undergone any fundamental changes so far. A modern development is long overdue. Because from the point of view of the insurance industry, subsidized private old-age provision is an important element in the overall concept of old-age provision, just like company pension schemes. GDV wants to present details of its concept at the annual media conference on Thursday.
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The federal government had already announced a fundamental reform of private old-age provision in the coalition agreement. One reason is that the Riester pension is not as widespread as originally hoped. According to the Federal Ministry of Labor there were just 15.9 million contracts in the third quarter of 2022, including 10.5 million insurance policies. Common points of criticism are an overly complex system of allowances and overly expensive products.
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The new focus group, set up in November, is due by the summer of 2023 to “explore the possibility of a publicly responsible fund that would offer consumers a non-mandatory, low-cost and effective offering for private old-age provision,” says a statement from the federal government. In addition, the focus group should examine the possibility of legal recognition of private products that achieve a higher return than the previous Riester contracts.
Riester pension
15.9
million contracts
According to the Federal Ministry of Labor there were 10.5 million insurance policies in the third quarter of 2022.
The core of the citizen’s pension is that the state subsidy should work very simply. For every euro paid in, 50 cents of funding should come, as can be seen from a GDV statement on the test orders from the focus group on January 13th.
So that low and middle earners in particular benefit, the eligible contributions should be limited to, for example, four percent of the contribution assessment limit of the statutory pension insurance. A contribution of a maximum of 3504 euros per year would be eligible, the subsidy would then be 1752 euros. The deposits should be tax-free, the benefits are taxed when paid out.
Insurance salespeople do not want sales without advice
As with the reform proposals for the Riester pension, the GDV is committed to lowering the guarantee level. In the case of Riester products, providers have so far had to guarantee 100 percent of the contributions paid. As a result, insurers are forced to invest most of their customer money in low-risk but low-interest government bonds – and can hardly rely on more promising investments such as stocks.
Selling without advice is in line with neither consumer protection nor the interests of the brokers, who fulfill an important socio-political task as pilots in the thicket of old-age provision products. Federal Association of German Insurance Merchants (BVK)
In order to keep costs low, there should also be digital options for completing the citizen’s pension. This in turn has already triggered criticism from the Federal Association of German Insurance Merchants (BVK). After the “Süddeutsche Zeitung” had reported in advance about GDV’s plans, the association immediately expressed its displeasure: “Sales without advice corresponds neither to the idea of consumer protection nor to the interests of the intermediaries, who fulfill an important socio-political task as pilots in the thicket of old-age provision products. “
Instead, the BVK calls for Riester to be made less bureaucratic, to simplify and to significantly expand the group of those entitled to allowances and to reduce the contribution guarantees.
The Federation of German Consumer Organizations (VZBV), on the other hand, considers a public pension fund to be clearly superior to private offerings such as Riester: “Riester has failed. A clear commitment from the traffic light to the necessary fundamental reform of supplementary pensions and the introduction of a pension fund is needed,” said VZBV board member Ramona Pop. The BVI fund association is in favor of a subsidized deposit for fund savings plans for old-age provision.
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