The former Federal Labor Minister Walter Riester (SPD) wanted this Retirement planning for employees – the state-funded Riester pension was named after him. Today it has fallen into disrepute and has essentially failed. Hardly any new contracts have been concluded for years; many of the more than 15 million contracts are no longer actively saved and have been put on hold. The number of state-sponsored private pension contracts has actually been declining since 2018. And while the traffic lights are arguing about pension package II and the FDP in particular is blocking it, Federal Finance Minister Christian Lindner (FDP), of all people, is presenting a draft for a reform of state-sponsored private pension provision.
The draft bill from the Federal Ministry of Finance, which is available to ZEIT ONLINE, essentially sees competition with the previous one Riester pension before. In the future, you should be able to choose whether you take out an insurance product like Riester or buy stocks and ETFs. The aim is for pension savers to be able to achieve a higher return than is currently possible. In many Riester and Rürup contracts (a basic pension for self-employed people who are not legally insured), high administrative costs and commissions reduce the return.
This will change in the future: In addition to the classic Riester pension, which remains and is still particularly attractive to people with low incomes and many children, there will soon be two other variants. On the one hand, a new pension portfolio in which you have a mix of pension insurance and Shares receives. However, only 80 percent of the contributions paid are guaranteed. On the other hand, there is an even riskier variant in which savers decide for themselves which securities they buy. Investments are made here in stock funds, shares of individual companies and ETFs – which means high losses are possible. The guarantee of the classic Riester depot on contributions and allowances paid does not exist with the last variant. With the Lindner depot, as it is already referred to in some media, you can achieve a correspondingly high return or hardly get out what was paid in. These return-oriented products are still certified, after all they are supposed to be subsidized by the state.
Full risk and zero guarantees in the Lindner depot
The 113-page draft contains much of what the focus group for private pension provision set up by the federal government recommended in its final report from July 2023. However, it was controversial at the time as to how risky a state-sponsored, capital market-oriented retirement provision product could be. The idea that government grants would ultimately be invested in the capital market at a loss in a Lindner depot met with criticism, particularly from union representatives.
There are also plans to create an independent, free-access comparison portal and the ability to switch between providers cheaply. According to the draft law, this is intended to strengthen competition among providers. The state certification of products should also be “streamlined and standardized,” according to the draft. As with Riester today, the new products are to be taxed downstream in the payment phase. However, the grant funding should become easier. The individual minimum personal amount – which is recalculated at Riester every year in order to be able to receive the maximum funding – should be eliminated.
However, there is no unlimited funding: a maximum of 3,000 euros in investments per year are supported by the state, and funding is available for a maximum of 600 euros. Parents get a little more, depending on the value of the share portfolio and the number of their children. Up to 300 euros per year per child are funded. The disadvantage for low earners and househusbands or housewives is that the minimum amount increases to ten euros per month, twice as much as in Riester. However, a bonus is planned for people with very little income: Anyone who has an annual income of less than 26,250 euros will receive an additional 175 euros in funding. People under 25 get a bonus of 200 euros.
The new private pension provision is scheduled to start in 2026. Initial costs are expected to be 380 million euros per year.
Higher earners in particular will benefit
The insurance industry is critical of the draft. Above all, the lack of a guarantee is a problem, says an insider. Another cause for dissatisfaction is that the payment should only be made until the age of 85, i.e. it is not a lifelong payment Pension payment will give. The unions criticize that the reform is not a real pension at all, but rather a new way to save on a purely capital-forming product. High earners in particular would benefit from the new pension products. Anyone who invests more than 7,000 euros per year receives a subsidy and tax advantage of at least 50 percent.
On Monday, the much-discussed draft law went to the departmental vote. If the law comes as planned, there will soon be another name among the few people after whom a pension is named – Walter Riester, Bert Rürup and Andrea Nahles -: Christian Lindner.
The former Federal Labor Minister Walter Riester (SPD) wanted this Retirement planning for employees – the state-funded Riester pension was named after him. Today it has fallen into disrepute and has essentially failed. Hardly any new contracts have been concluded for years; many of the more than 15 million contracts are no longer actively saved and have been put on hold. The number of state-sponsored private pension contracts has actually been declining since 2018. And while the traffic lights are arguing about pension package II and the FDP in particular is blocking it, Federal Finance Minister Christian Lindner (FDP), of all people, is presenting a draft for a reform of state-sponsored private pension provision.
