Retirement provision: How high the Riester pensions really are

This article is adapted from the business magazine Capital and is available here for ten days.

Retirement provision: How high the Riester pensions really are

This article is adapted from the business magazine Capital and is available here for ten days. Afterwards it will only be available to read at Like stern, Capital belongs to RTL Deutschland.

Customers and consumer advocates have long been complaining about the high costs of the Riester pension. Above all, the administrative effort and the complicated products make the contracts so expensive. And so expensive that it often eats up government funding. Another, more financial-mathematical problem is not yet known to most customers. Because what actually comes out of the contracts in the end has so far been difficult to quantify. Until now. Because new figures from the Federal Ministry of Finance now show how high the annual payments from Riester contracts actually are at the moment. The result is more frightening than expected.

The Federal Ministry of Finance presented figures for the total of around one million contracts that have already entered the retirement phase and broken down into the average figures for different constellations. For example, for male and female pension recipients, whether you have the pension paid out on a monthly basis or whether you withdraw part of the capital at the beginning. The data is from the end of 2022, to coincide with the 20th anniversary of the Riester pension. This is important because the first 20-year contracts are now entering the payout phase.

One number in particular catches the eye: On average, the annual payout from Riester pensions - across all people who already receive a payout - is 1,581 euros. That's 131 euros per month. An average contract doesn't yield more than that. But that's not even the worst part.

Because the meager 131 euros is only half the story. Although this amount already shows how far the Riester pension falls short of its actual goal. The aim is to compensate for the pension gap that is opening up in the statutory pension, which is continuing to shrink. The full truth is: The 131 euros are just the calculated average, and it is distorted upwards by a few Riester contracts with higher payouts. The majority of contracts, on the other hand, still fall far short of this average. This is shown by the median, which we urgently need to look at here:

The median refers to the mean value below which exactly half of the Riester pensions fall short, while the other half are above this amount. The median here is 840 euros per year, which corresponds to 70 euros per month. Across all people who either receive payments from one or more Riester contracts (because of course you can conclude several contracts, even if only one is state-funded), as well as from current monthly pensions or one-off payments. If you only look at those people with a single Riester contract who already receive a current monthly pension (which should be the norm with this state-funded pension product), this sum shrinks even more: Then there is only 728 euros in median that such " "normal" Riester pensioners are paid annually. So 60 euros a month.

In many contracts, the capital saved by the end of the contract term is so small that it is not even annuitized, or the customer could withdraw part of the capital and only receive the remaining amount as a monthly pension. In such cases with extremely small capital, there is a so-called "compensation of a small amount pension" because otherwise the monthly pension would be so tiny that it would not be worth paying out in pieces. And at least 22 percent of all Riester contracts that expired in 2022 - after 20 years of savings, mind you - only contain such small amounts. So every fifth contract.

Not only does this sound like a shocking conclusion after 20 years of saving with Riester contracts, but it is when you look at the detailed figures: 31 percent of all pensioners receive less than 500 euros per year from their Riester contract (not 42 euros per month). Another 32 percent receive a maximum of 83 euros per month, i.e. 1,000 euros per year. And not even 20 percent receive more than 125 euros per month in ongoing pension payments.

All of this makes it clear how justified the warnings from consumer associations such as Finanzwende are, which recently calculated that with the Riester and Rürup contracts currently sold - whether they are unit-linked or classic pension insurance - one should probably expect returns that are so small that they are in As a rule, they do not even compensate for inflation in the long term. In plain language: savers ultimately even made losses. Despite basic government funding.

We also know from the data from the Ministry of Finance that the contracts are usually not saved very lavishly. On average, almost 1,000 euros are invested annually. In other words, more will be paid out each year in terms of current pensions than with most contracts. This alone shows how poor the return on the contracts must be. One thing is all the more puzzling: Why have politicians been discussing this grievance for years, but have not yet brought about a Riester reform? Not even remotely. Although even experts, economic research institutes and economists are loudly demanding it. So far, this has been blocked primarily by the insurance company lobby, which is well wired into parliament and the government.