The number of new private pension (Riester-Rente) and basic pension (Rürup-Rente) contracts declined last year, according to figures published last week by the German Insurance Association (GDV), while diverging plans to reform the third pillar pension system put forward by the country’s political parties ahead of this month’s elections jeopardise the implementation of the reform already drafted.
The number of new Riester-Rente contracts plunged by 25.3%, or around 10,000, year-on-year in 2024 to 31,000, from 41,100 in 2023 and, even more remarkably, from 125,000 new contracts signed in 2022, GDV’s figures show.
The number of new Rürup-Rente contracts, instead, fell less markedly, by 1.4% year-on-year in 2024 to 132,000. The total number of Rürup-Rente pensions in Germany has remained stable last year at around 2.7 million, while Riester-Rente pensions declined to 9.7 million in 2024 from 10 million in 2023, according to GDV.
The insurance association reiterated the urgency to reform Germany’s three pillar pension system, with general elections approaching on 23 February.
“The demographic change poses major challenges to the pension system,” GDV’s chief executive officer Jörg Asmussen said.
He added: “The burden must be spread wisely across all three [pension system] pillars. We need reforms in the first pillar pension system, for private and company pension schemes. This must be a priority for the new government.”
The finance ministry under the ‘traffic light’ government coalition of the social democrats (SPD), Greens and the liberal party (FDP) drafted a reform of the third pillar private pensions to introduce retirement savings accounts, and cut guarantees on contributions paid to channel savings in risker assets for higher returns.
According to the GDV, last year’s reform proposal was promising. “We will continue to advocate for a moderate reduction of the guarantees,” Asmussen said.
GDV has calculated that the third pillar reform drafted by the ‘traffic light’ coalition government leads to pension payouts that are up to 40% higher than Riester-Rente.
However, parties’ electoral programmes show that plans to reform Germany’s pension system diverge, and reform zeal falls short of expectations, the fund association BVI said after taking a closer look at the programmes ahead of the elections.
The liberal party (FDP) continues to back the introduction of a retirement savings account, while the far-right party, the Alternative for Germany (AfD), wants tax-free retirement accounts.
The Greens want a Citizens’ Fund (Bürgerfonds) for private pensions, the social democrats are pushing for transparent products with a cost cap and state funding, and the Union, the alliance of Christian Democratic Party (CDU) and Christian Social Union (CSU) leading the polls, is keeping its plans vague.
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