What is it?
Simply put, the Riester pension is a government-subsidised private retirement provision, that provides pension payments once you hit retirement age.
In order to receive the government subsidies, a Riester saver must contribute 4% of their gross income, up to a maximum of €2,100 per year. The subsidies amount to €175 yearly for adults, and an additional €300 per year for each child that is eligible for child benefits.
What are the benefits?
Although regularly criticised, the consumer association describes the Riester pension as “a good opportunity for most people to increase their private retirement provision”. There are various kinds of benefits. Parents, for example, benefit from the high additional allowances for children. Those with a higher income can receive tax benefits. The Riester pension is also an interesting option for low-income earners, since they will already receive benefits with a contribution of as little as €60 per year. What is important to know: Since 2018, Riester savers may retain up to €200 of their private pension, regardless of any basic state provision.
Where does the Riester pension get its bad reputation?
The bad reputation of the Riester pension is mainly due to the high contract costs from a few insurance providers. The higher these costs are, the lower your final pension will be. However, there are a number of providers with whom you can obtain the state subsidy without any contract costs at all.
We will help you to create the pension scheme that perfectly matches your needs.
Who is it for?
Classic Riester pension
The safest type of pension, since you will know in advance how high your future pay-out will be. However, this is also the type with the lowest potential interest.
Fund-based Riester pension
A little bit riskier but with the prospect of higher returns through a suitable fund selection on the part of the provider. This type guarantees the repayment of the savings you paid into the plan.
Riester fund plan
The Riester plan with the highest potential interest. This type allows a more flexible adjustment to the financial markets than the fund-based plans. Same as before, this plan also guarantees the repayment of savings paid into the plan.
Riester for property owners
An interesting option if you’re planning to acquire your own property. The state-provided subsidy can immediately be used for the repayment of your mortgage.
The Riester pension is better than its reputation may suggest. If planned correctly, you can gain long-term benefits from the state subsidy. However, before committing to a plan that spans multiple decades, you should make sure to get the best consultation possible. In the end, the decision for a provider as well as the type of Riester plan is very much dependent on your personal situation.
Feel free to reach out to us! We will analyse your personal situation and present you with Riester plans with various risk and return prospects.
Together we will create a sustainable solution for your retirement provision!
Interesting & Useful things
More comprehensive information:
Concrete information on state subsidies:
Riester pension calculator: