Low-cost, with no fixed commitments and on a glide path towards the return of the stock market: Senior Analyst Dr. Anselm Hüwe explains how retirement planning at quirion differs from other offerings.
Mr Hüwe, the state pension alone isn't enough to maintain your standard of living in old age. Most people are aware of that by now. Why is there still too little provision being made?
In order to be able to set any money aside at all, there naturally has to be enough left over to save in the first place. But for many people that is the case. According to the Bundesbank, at the end of 2020 the financial assets of private households totalled almost 7 trillion euros. We believe the lack of provision is due, among other things, to the way traditional retirement products are structured. Take the classic life insurance policy. For a start, it's pretty hard to see through: which policyholder actually knows exactly how much of the insurance premium is invested and where the money goes? On top of that, such products tie retirement savers firmly to them. If your life circumstances change unexpectedly, you can barely get at the capital you've already saved up — or only at high cost. Above all, though, such products are expensive. It's only after many years that the acquisition costs are covered. And costs always come at the expense of returns.
So what does quirion do differently?
Retirement planning costs something with us too. But we keep the costs very low. That's because we invest cheaply in ETFs and thereby give investors a stake in the returns of the global stock markets. True, there are no guarantees with us. But guarantees cost money and are becoming ever less attractive. From 2022, for example, the so-called guaranteed interest rate in life insurance is set to fall from the current 0.9 percent to just 0.25 percent. As with all non-subsidised offerings, there are no state top-ups. In return, you have more flexibility. With us you can get at your money at any time, at no extra cost — just as with our standard portfolios. Unlike those, however, we gear our retirement planning to the saver's age and their likely retirement date.
Why do different rules apply in the retirement-planning strategy?
We generally assume that every investor has individual but stable risk preferences. In our standard portfolios we therefore keep the equity ratio constant. With the retirement-planning portfolios, by contrast, we take the perspective of total wealth. Alongside financial assets, that also includes income from work. So-called human capital — the value of all future earnings from work — logically decreases steadily as you get older. A further point is that annual fluctuations in wages are far below those of a well-diversified equity portfolio. So if you want a constant level of risk for your total wealth, the equity share falls with age.
Does that mean quirion looks only at your age in its retirement-planning strategy?
We've defined three glide paths. These are geared to your appetite for risk. Investors choose between the „offensive“, „moderate“ or „defensive“ options. So we take into account both your appetite for risk and your age and the time until retirement. In each of the three glide paths, the equity share then becomes ever smaller over time.
What do I do if I'm already just before retirement, or have reached retirement age?
With us, retirement planning isn't tied to a particular point of entry. If the retirement phase has already begun, protection against inflation is entirely front and centre. In the retirement-planning portfolios we then achieve this through inflation-protected bonds and also through commodity investments.
If there are no guarantees: how safe is my retirement provision at quirion?
ETFs are segregated assets. That means they are protected in the event of a fund company or bank becoming insolvent. They are the property of the investors. Of course, we can't rule out capital-market risks. But those are the „price“ of a chance at a return — and that's a chance worth taking. Because anyone who wants to close their pension gap over the long term can hardly do without the return of the stock market.
