If you are fit in old age, you also want to be financially secure in your old age.
(Photo: imago images/Addictive Stock)
Cologne Around eleven million households in Germany cannot close their pension gap from their income in old age. This is confirmed by a study by the Prognos research institute on behalf of the German Insurance Association (GDV).
The problem is exacerbated by the high inflation rate. Prices in Germany rose by 7.6 percent in June compared to the previous year.
The pension increase of 5.35 percent in the western federal states and 6.12 percent in the eastern federal states, which came into force on July 1, is not sufficient to maintain the purchasing power of pensions. “On the one hand, inflation increases the need for provisions for the future, but at the same time narrows the scope for saving today,” emphasizes GDV General Manager Jörg Asmussen.
Better government support for private old-age provision for low-income earners is more urgent than ever. But the reform of the Riester pension that has been announced for years is still a long time coming. It failed due to excessive requirements and costs.
“Because the maximum technical interest rate was lowered to 0.25 percent this year, insurance companies can no longer present the products,” says Michael Franke, Managing Director of the rating agency Franke and Bornberg. Riester pensions are hardly ever offered.
Top jobs of the day
Find the best jobs now and
be notified by email.
If you can, you should start saving for retirement as early as possible. The longer a person saves and invests, the stronger the compound interest effect. Private pension insurance is one option for people who want to build up an additional pension and receive a monthly pension when they reach retirement age. Savers should choose carefully: “Conventional annuity insurance based on interest rate products makes no sense in an environment with negative real interest rates,” explains Franke.
Investors should also do without guarantees, which are very popular in Germany, if they can bear the associated higher risk. In view of low interest rates, insurers have to invest a very large proportion of the capital securely in order to reflect the guarantees.
The rating agency Franke und Bornberg examined and analyzed the pension products for the Handelsblatt newspaper. Fund-based products are particularly attractive. There are product variants that guarantee the receipt of part of the deposited capital. Investors who do without a guarantee have more freedom.
Private pension with 80 percent guarantee
Savers who value security can opt for a fund-based variant with a limited capital guarantee of 80 percent, for example. These products are still very popular.
In the test, Europa Lebensversicherung came out on top with the product “Unit-linked pension insurance with guarantee tariff E-RIG”. “This annuity insurance combines the return opportunities of a unit-linked annuity insurance with the security of a guaranteed benefit,” says Helmut Hofmeier, Life Director at Continentale Versicherungsverbund.
The guarantee is represented by the guarantee assets of Europa Lebensversicherung in low-risk capital investments. The investor can invest the fund share in actively managed investment funds, but also in exchange-traded index funds (ETFs). Once you retire, the capital you have saved is paid out as an annuity.
>> Read also: Ranking 2022 – These are the best basic pensions for the self-employed
One of the providers awarded the highest mark is Stuttgarter Lebensversicherung with the product “Performance + FlexRente (Hybrid) Tariff 73oG”. The investor can choose different contribution guarantees between zero and 80 percent. Irrespective of the amount of the guarantee, 100 percent of the savings initially goes into funds.
Investors can choose between 150 funds and ten managed portfolios. “The spectrum ranges from conservative to risk-taking and across various sectors and topics such as health or renewable energies. The focus is on sustainable funds,” says Jens Göhner, Head of Product Marketing at Stuttgarter Lebensversicherung.
With Stuttgarter Lebensversicherung, the customer can continue to invest part of the accumulated capital in funds during the retirement phase. In view of increasing life expectancy, it makes sense to invest capital profitably on the stock markets, even in old age.
Fund-based solutions without guarantee
Fund-based private pensions without a capital guarantee offer a high degree of freedom. Because there are no conditions, the money can be freely invested. This means greater opportunities for returns, but also the risk of high price fluctuations and, in extreme cases, the loss of capital.
Ergo Vorsorge Lebensversicherung AG did very well with the “Ergo Rente Chance” tariff. The range of funds includes 70 funds. The saver can save in up to 20 funds for old age at the same time. “The selection includes, among other things, our three Ergo wealth management funds with professional and global wealth management, which are tailored to the respective investment strategy of our customers,” says Oliver Horn, Head of Life Product Management at the Ergo Group.
Investors can exchange funds twelve times a year free of charge. “At the request of our customers, we gradually shift the fund assets into a fund with a lower fluctuation range in the last few years before the start of the disposal phase,” says Horn. Investors can have the saved contribution paid out as a lump sum, as a monthly payment or as a combination.
The WWK life insurance with the tariff “Premium FondsRente 2.0 per tariff FV22 Sx” did very well in the test. WWK invests in institutional funds that have lower costs than tranches for private investors. The spectrum of available funds ranges from actively managed funds to ETFs and theme funds.
Investors have options when they retire: “The capital saved can be fully converted into security assets,” says Winfried Gassner, Head of Product Management at WWK Versicherungen. Alternatively, the customer can continue to invest up to 50 percent of the capital in funds. In this way, he also benefits from the opportunities of the capital market in the retirement phase.
More: Embarking on new growth – These are the best financial service providers