Foto: PantherMedia/dolgalchov
Lucrative for customers and agents thanks to 1.0 percent interest rate
The statutory pension is no longer sufficient today or in the future to maintain the usual standard of living in old age. Self-responsible action in retirement provision is required. The federal government had to reduce the level of statutory pension provision back in 2001. For this reason, the state introduced the Riester pension in 2002.
The Riester pension helps you build up private retirement provision and helps offset cuts in statutory pension insurance. A key advantage and incentive for customers: this private pension is subsidized by the state.
Riester pension successfully established on the market
From today’s perspective, the Riester pension is a remarkable success, with over 15 million contracts concluded for around 37.5 million eligible people. Over a period of just over 20 years, a much higher market penetration has been achieved than, for example, in company pension schemes, which have now been in existence for around 50 years. Nevertheless, the demand potential is far from being exhausted.
State support for Riester savers
The state promotes the Riester pension by topping up the customer’s payments with allowances. The allowances consist of a basic allowance and a child allowance: The annual basic allowance is 175 euros per person. The child allowance is 300 euros per child per year (185 euros per year for children born before January 1, 2008). This form of pension provision is particularly worthwhile for young people starting out in their careers up to the age of 25. In addition to the allowances, they receive a one-off bonus of 200 euros.
The Riester pension can also bring benefits when it comes to income tax. The contributions paid in and the state allowances can be claimed as special expenses for income tax purposes. The tax office then checks whether the tax savings from the special expenses deduction are higher than the allowance (“more favorable test”). If the special expenses deduction is more worthwhile, this leads to an additional tax reduction.
For whom does the Riester pension make sense as a retirement plan?
How much you can benefit from the advantages of the Riester pension depends on your professional situation, income and number of children. Because of the personal support, Riester is particularly useful for low earners and families with children. At the same time, the special expense deduction has a positive tax effect, especially for higher earners.
Riester pension is a reliable retirement provision
Riester insurance providers must comply with government regulations: All Riester contracts that focus on pension benefits must guarantee that at least the self-paid contributions plus the government subsidies are available at the start of the payout phase. This makes sense for customers: the pension capital is protected against losses and is retained in any case.
Author Thomas Heß, Head of Marketing and Organization Director Partner Sales
Modern Riester pensions are highly profitable for savers
The media and politicians have unfairly discredited the Riester pension in recent years. The Riester pension is better than its reputation: if you look at the subsidized return that is crucial for the customer, Riester is almost unbeatable in terms of its overall return – even after deducting all costs. This is especially true for intelligent product concepts that allow high investment rates in equity funds over and above the state subsidies.
The guarantee mechanism for WWK’s Riester pension is based on a so-called iCPPI model. The daily allocation of each individual customer contract between the security assets and freely selectable equity funds gives savers very high return opportunities during the savings phase. Up to 100 percent of the savings contributions can flow into equities. This means that first-class performance opportunities combined with full capital protection at the end of the contract term are possible.
WWK’s Riester pension receives top marks
The tariff, known on the market under the product name WWK Premium FörderRente protect, has proven itself since its market launch in 2009 and has enabled customers to achieve attractive returns after deducting all costs. Due to their extremely customer-friendly insurance conditions, all previous tariff generations have been awarded prizes by independent institutes. The currently available tariffs have also been given the top rating FFF+ by the well-known industry rating agency Franke & Bornberg.
“Riestern like before” – at WWK with 1.0 percent interest rate
WWK has been offering its brand new Riester tariff RR25 with the increased actuarial interest rate of 1.0 percent since July 1, 2024. It enables customers with an actuarial start date of January 1, 2025 to have state-subsidized retirement provision with an increased actuarial interest rate. WWK is thus reacting to the first increase in the maximum actuarial interest rate for life insurance products in 30 years. This will rise from the current 0.25 to 1.00 percent on January 1, 2025.
Riester is as attractive as ever – for customers and for brokers
The announcement that the maximum actuarial interest rate will be raised from the current 0.25 percent to 1.0 percent from January 1, 2025 is fundamentally good news not only for pension customers, but also for all brokers. The reduction in commission, which was unavoidable with the previous RR10 tariff due to the maximum actuarial interest rate of 0.25 percent, will no longer apply with the new RR25. This makes Riester just as attractive for our brokers as other pension plans.
Since July 1, agents have been able to calculate pension proposals with the maximum interest rate of 1.0 percent in the WWK offer program (AVANTI), provided the contract begins in 2025. The sales remuneration is already paid close to the time spent on the consultation. Riester is therefore again as attractive for agents as it used to be.
WWK: Provider change and upgrade options included
A change of provider to WWK in the new RR25 can also be applied for from July 1, 2024. The implementation will then take place in 2025, when the new contract has actually been concluded. WWK offers a full service for the change of provider that has been tried and tested thousands of times in order to keep the effort for the agent to a minimum. For example, we take over communication with the previous provider and with the ZFA (Central Allowance Office for Retirement Assets) in order to make the change of provider as simple and quick as possible.
If, depending on the circumstances, it makes sense for customers to take out a Riester pension in 2024, WWK will continue to offer its current Riester RR10 tariff until the end of the year. In this case, the allowances for 2024 will also be included in the contract. All customers who take out a new RR10 contract in 2024 for this reason will automatically receive an “upgrade option” to the new RR25 tariff generation with an increased interest rate. Even customers who upgrade an existing Riester contract in the RR10 tariff will receive this option. In 2025, we will then make these customers an unsolicited offer so that they can freely decide on the basis of broad information whether they want a tariff upgrade. If this is the case, we will change the contract.
