What do people in Germany think of the retirement provision account? We asked. And it turned out: there is already great interest. What we found out and what makes the new retirement model attractive.
How likely is it that you will open a retirement account? That is one of the questions we put to people eligible for the subsidy, aged 16 to 60, at the beginning of May. Even at this early stage, the majority – namely 52 percent of respondents – showed concrete interest. Which is quite remarkable. Because when we asked people our questions, the reform of private retirement provision had not even been finally approved by the Bundesrat.
On January 1, 2027, the time will come. On its 25th anniversary, the old Riester model will be replaced by the new subsidy rules. For most people, a quarter of a century of the Riester pension has given no reason to celebrate. The high costs of the insurance guarantees choked off wealth accumulation. Many canceled their contracts early, accepting that they would have to pay back the allowances and tax advantages they had received.
A more efficient path to your retirement goal
The retirement account does without guarantees. This means that, for the first time in Germany too, ETF and stock investments may be part of state-subsidized retirement provision. A great opportunity to finally make the subsidy scheme more efficient.
At the same time, the people we surveyed are not primarily looking for maximum returns. What matters to them above all are understandable products, low fees, and clear rules. That will not happen by itself once the new rules are introduced. Because they still leave room for opaque structures and higher costs than would actually be beneficial.
Even though we are still working on the details of our offers for the retirement account: what is clear is that our fees will be far below the cost cap of 1.0 percent per year envisaged for the so-called standard account. The standard account is the basic variant of retirement accounts. There will be further alternatives alongside it.
Savings goal of 180 euros a month
As our survey shows, those interested want to pay an average of around 180 euros a month into a retirement account. However, there is a gap between men and women when it comes to desired savings amounts. Men plan to invest an average of 223 euros per month, women 124 euros. One explanation, among others, is that women are still often financially worse off than men. But that is exactly why private retirement provision for women is so important.
What is encouraging, however, is that the gap in interest in the retirement account is much smaller. 55 percent of male respondents can imagine opening a retirement account. Among women, the figure is still 48 percent. Looking at figures on share ownership from the Deutsches Aktieninstitut, the share of women there stood at around 38 percent last year. The retirement account is an opportunity to further close the "gender gap" here.
Reaching the broader population
The aim of the reform is, after all, to encourage more people to make private provision for retirement. Especially those who have so far failed to do so. That is why the subsidy is tiered: for low savings amounts, the state adds more on top than for higher ones. Families receive even more money. The maximum child allowance of 300 euros per child per year is available from a savings rate of just 25 euros a month.
Anyone who already has a Riester contract can switch to the new retirement model, but does not have to. In our survey, 26 percent of interested respondents with an active Riester contract expressed the wish to let the contract rest and open a retirement account in parallel. 22 percent plan to transfer their previously active Riester contract into a newly opened retirement account.
Seizing opportunities and avoiding unnecessary risks
Half of the respondents in our survey view it positively that, with the reform, direct investment in securities is now also subsidized. However, 44 percent are convinced that the risks of the retirement account are higher than those of insurance products. Yet there are several levers for keeping the risks of investing low. One of them is the longest possible investment horizon. Because over time, price fluctuations smooth out.
Nobody knows which individual companies will be among the winners in the future – a fundamental risk when investing in stocks. What we do know, however, is that stock markets tend to rise over the long term and on average. Because stocks give you a stake in companies and thus in the economy. And the economy is geared towards growth. When investing, it is therefore advisable to aim for the broadest possible diversification. That will also be important with the retirement account.
The details of how exactly the new products will be structured will only become known in the coming months. But if you already want to see how the subsidy, your own contributions, and the return opportunities of the stock markets can work together, you will find some examples here. Or you can try out our calculator for the retirement account.
More questions about the retirement account? Answers are provided by quirion.Ai.
