The Costly Reality of Some Private Pension Schemes: Only a Few Measure Up
Just three pension plans are deemed suitable
Placing savings for retirement is crucial, but the question remains: where should those savings be kept? The knee-jerk reaction to invest in private pension insurance might not always be worthwhile. It's simple, but tricky. The long lifespan required to reap the benefits of these guaranteed pensions, coupled with high costs, can leave many customers in the lurch.
Pondering over private retirement provision? Millions of customers have previously opted for classic private pension insurance offers, boasting a guaranteed interest rate on savings contributions. While they don't promise extravagant returns, they guarantee a fixed interest rate and a lifetime pension. Add to that, they're convenient: once the contract is signed, there's no more worry about investment. The insurer takes care of the funds.
However, starting from 2025, insurers can only guarantee a maximum annual interest rate of 1%. Here's the catch: it's not the entire customer's contribution that earns interest. Costs are first subtracted, which reduces the return.
Stiftung Warentest scrutinized 14 such tariffs from various insurers, ensuring that at least 90% of the contributions made are present at the onset of the pension period. The insurers evaluated range from the market leader Allianz to Europa to Württembergische.
Majority of Policies under "Satisfactory"
For a hypothetical scenario, the study calculated the projected guaranteed pensions from providers if a customer pays 200 euros per month for 30 years (totaling 72,000 euros) and starts receiving the pension at 67. The evaluation also covered investment success, insurer costs, and the flexibility and transparency of the contracts.
Result: A majority of the policies were only "satisfactory". The primary reason for the lackluster performance: high costs. Expensive insurers cannot guarantee a high pension.
There were only three instances of the top rating "good". These are the tariffs "Europa E-RCP" (grade 2.2, guaranteed monthly pension 218 euros), "Hannoversche Bausteinrente R4" (2.3, 240 euros) and "Die Bayerische KlassikRente 25867" (2.4, 220 euros). Test winner Europa has low costs, enhancing the return. Here, costs shave off merely 0.32 percentage points, as compared to market leader "Allianz PrivatRente Perspektive" with 1.24 percentage points - nearly four times more (guaranteed monthly pension 204 euros, "satisfactory"). Hannoversche has the highest guaranteed pension, yet it lacks in terms of flexibility and transparency.
If insurers don't dish out more than the guaranteed pension by the end, customers have to live well beyond 90 years to recoup their contributions, even with a good tariff from the comparison.
While the aforementioned top 3 private pension insurance policies may be unmentioned in recent search results, it's worth noting that private pension options in Germany are common for supplementing public pensions. Organizations like Stiftung Warentest often evaluate these policies based on cost, coverage, and policy flexibility. For specific rankings and ratings from Stiftung Warentest, it is advisable to consult their official reports or publications from 2022. For the most updated information, it is best to check their website for detailed rankings and comparisons of private pension insurance policies.
- To maximize personal-finance and secure a decent retirement, one might want to consider the top-rated vocational training programs that could provide additional sources of income through business ventures.
- Interestingly, even while seeking better financial management for personal-finance, it's essential to scrutinize community policy like vocational training programs and private pension schemes to ensure they offer good value for money and strike a balance between costs and returns.
