GERMANY – Demand for the ‘Riester-Rente’, a government-subsidised private pension launched in 2002, continued to surge in the first quarter, pushing the total number of contracts above 6mn, the government has reported.

The ministry for labour and social affairs said that during the first quarter, 570,000 new Riester contracts were sold, bringing the total number of contracts for the pension to 6.2m.

The ministry said that while most Riester contracts were of the private insurance type, demand for fund-type products was gaining speed.

German fund industry association BVI has already reported that in the first quarter alone, 112,000 fund-type contracts were sold. These products now account for roughly 11% of the 6.2m Riester contracts.

Continued strong demand for the Riester pension follows improvements made to it by the government in late 2004. These include allowing greater portability, streamlining the criteria for subsidies and lifting a requirement on monthly contributions.

Regarding further incentives for the pension, the ministry said the government would increase the tax credit for Riester pension holders with children. As a result, the tax credit will be increased to €300 for every child born after 1 January 2008.

Finally, the ministry cited previous statistics indicating that currently, around 60% of German employees own some type of corporate pension.

“The statistics reflect that great progress has been made in expanding and strengthening of second- and third-pillar pensions. This must continue,” the ministry added.