GERMANY - More evidence has emerged of a boom in Riester Rente - the tax-privileged private pension launched in 2002.
German independent financial adviser Deutsche Vermögensberatung AG has joined rivals AWD and MLP in reporting a boom in sales of the Riester products.
DVAG said sales of the pension totalled 55,000 in the first half, an increase of 110% over the same period in 2004. Big jumps in Riester pension sales have also been reported in recent months by AWD, MLP and AMB Generali, a big German life insurer.
The outgoing government, which created the Riester pension, is not expected to disclose the total number of pensions sold in Germany before an election in September.
At the end of 2004, the figure stood at 3.8m, or 12.6% of the estimated 30 million in Germany considered eligible for the pension.
However, German fund industry association BVI said sales of the Riester pension among its members continued to disappoint in the first half of 2005. According to BVI, its fund companies sold 32,000 of the pensions during the period, bringing the total number of contracts to 390,000.
Although the government simplified the Riester pension as 2005 began, BVI still argues that the product is too complex. Since the end of 2003, it has been urging the government to introduce a private pension modelled after individual retirement accounts (IRAs) in the US.
In a related development, German social affairs minister Ulla Schmidt reaffirmed that the government had no plans to make private saving for retirement mandatory. Her remarks followed an admission that, next month, Germany’s state pension scheme must be bailed out for the first time in 20 years.
The pay-as-you-go scheme will face a deficit of €500m in September which will be covered by a cash injection from the finance ministry.
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