“Riester” is all the rage! Even in 2012, more and more young people are turning to this state-subsidized pension plan. To ensure greater financial security in retirement, it makes sense to start setting aside the necessary savings now, doesn’t it? After all, who knows what the future will bring? Private retirement planning is simply essential in times like these, because you can no longer count on a fixed pension in 30, 40, or even 50 years. And with the attractive interest rates offered by the government, securing your retirement after your working years pays off twice over. With the Riester pension, you receive a monthly retirement benefit for the rest of your life.
Advantages and Disadvantages of the Riester Pension
Incidentally, the term “Riester” comes from Walter Riester, who was the Federal Minister of Labor and Social Affairs at the time and who lent his name to the subsidized private pension insurance program in 2000. The advantages of this government-subsidized retirement plan are easy to list:
- Capital can be withdrawn when you start receiving your pension
- government-funded
- lifetime pension
- Contribution payments can be structured flexibly
- The Riester pension is transferable
- Guaranteed payout
- The Riester pension is compatible with Hartz IV
- If you want to buy a home, private pension insurance can also be useful
But making provisions early in life to ensure a worry-free life in old age and after retirement also has its downsides. The disadvantages of the Riester pension cannot be ignored:
- Benefits are subject to full taxation
- If you move abroad (outside the EU), you will lose your financial assistance
- In the event of inheritance, the government-subsidized insurance proves to be inflexible
- The Riester pension is based on the assumption of a high life expectancy
- relatively high closing costs
- It is not possible to take out a loan or pledge the item as collateral
- If the policy is canceled, the Riester subsidy must be repaid
- limited flexibility in payouts (keyword: life annuity)
Riester Products: More Than Just a Pension Plan
The online portal riester-informationen.de offers its readers up-to-date information on the various Riester-related products. After all, “Riester” is much more than just a voluntary pension plan. The website features detailed articles on Riester fund savings plans, Riester loans, and the Riester bank savings plan. Criticism of the concept is also being voiced, because not all that glitters is gold—and the same goes for the Riester pension. Anyone currently wading through the jungle of legal jargon in search of the right retirement plan is guaranteed to find help at riester-informationen.de. Reliable and independent information on the various government subsidies, incentives, and the annual tax return is available online from the specialist in government pension insurance—free of charge and anonymously. This way, you can lay the foundation early in life for what will hopefully be a long and financially secure life for yourself and your family.
