Savings banks are in favor of merging the Riester and Rürup pensions

Savings banks advocate merging Riester and Rürup pensions

Politicians are discussing new concepts for private old-age provision. Insurers and savings banks are trying to position themselves early.

(Photo: ullstein bild – Reiner Zensen)

Frankfurt, Munich After the insurers, the German savings banks are also positioning themselves in the discussion about the future of private old-age provision. “We can imagine merging the Riester and Rürup pensions. It’s about combining the strengths of both products,” said Karolin Schriever, board member of the German Savings Banks and Giro Association (DSGV), the Handelsblatt.

According to Schriever, Riester and Rürup pensions are “two completely different products”. “We see disadvantages in both, but also positive elements. The best of both worlds could be combined.”

From her point of view, the ideas of the Riester and Rürup pensions were good: “People with lower incomes should also be able to make additional provisions for their old age. We should stick to that.” In general, however, savers should be made much more accessible to the opportunities offered by the capital market. “In addition, the allowance process should be less bureaucratic,” said Schriever.

The Riester pension is considered complex, too expensive and low-yield. New business has collapsed, both for insurers and banks – for the savings banks alone by 70 percent between 2014 and 2021. That is why politicians want to fundamentally reform state-subsidised private old-age provision. The so-called “focus group on private old-age provision” under the leadership of the Federal Ministry of Finance is currently working on possible alternatives.

There have been repeated attempts to abolish the Riester pension. Almost 16 million current Riester contracts were recently registered, two thirds of which are insurance policies. However, only a few insurers currently offer the product at all. Should it be replaced, the question would remain how to deal with the current contracts of those people who are already receiving a Riester pension.

Moving away from 100 percent guarantees

A few days ago, the insurance industry proposed an alternative Riester concept, the “citizen’s pension”. It is intended to eliminate the main points of criticism of the Riester pension. This also means that customer deposits are no longer completely guaranteed, but only 80 percent. As a result, insurers could invest customer funds more than before in the stock market and thus in a yield-oriented manner. In view of the guarantee requirement, the insurance industry has benefited greatly from the introduction of the Riester pension. Now she fears falling behind in the discussion about the future product.

Caroline Schriever

The board member of the savings bank lobby association DSGV is in favor of more choice when it comes to the amount of the capital guarantee.

The savings banks are also planning to move away from a 100 percent capital guarantee. This guarantee sounds good at first, but narrows the investment options and makes it very difficult to generate an attractive return for customers, said Schriever.

“It would be better if people could decide more freely about the guarantee. Depending on what is the right solution for you personally.” In addition, flexibility in old-age provision should be increased, for example part-time work and sabbaticals should be taken into account.

The Riester pension was introduced in 2002 by the red-green federal government under the then Labor Minister Walter Riester. It was intended to cushion the government’s pension cuts and, above all, to enable people on lower incomes to save for old age. There are generous grants for this, including for families, but using them is complicated.

The Rürup pension, which was actually presented under the name “basic pension” by a working group led by the economist Bert Rürup, came into existence with the 2005 Retirement Income Act. It was devised to offer all those who cannot pay into the statutory pension insurance a full pension in old age.

Parallel to the reform of private old-age provision, the federal government is planning to provide the statutory pension insurance with a capital stock. The SPD, Greens and FDP had agreed in the coalition agreement to make ten billion euros available to the pension insurance system in order to build up such a capital stock and “use the return opportunities of the global capital market”. So far, the pension has only been financed by contributions and taxes.

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