Private Pension Insurance: A Pricey, Hit-or-Miss Deal?
Just three pension plans deemed satisfactory
Navigating retirement savings can be tricky. Private pension insurance, while appealing, isn't always the silver bullet. The longevity needed to make these investments worthwhile combined with high costs make them a risky proposition.
Classic private pension insurance, offering fixed interest rates and guaranteed lifelong pensions, might seem attractive. With the insurer handling investments, customers have one less concern. However, starting from 2025, insurers can only promise a maximum annual interest rate of 1 percent. Additionally, not all the customer's contribution is interest-bearing, with costs being deducted first, reducing the return.
Stiftung Warentest scrutinized 14 tariffs from various insurers, ensuring at least 90 percent of the contributed funds are present at the start of the pension. Tested companies ranged from market leader Allianz to Europa to Württembergische.
Most Insufficient Results
In a simulated scenario, Stiftung Warentest determined the guaranteed pensions offered by providers when a customer pays in €200 per month for 30 years (totaling €72,000) and begins receiving the pension at age 67. The providers' investment success, insurer costs, contract flexibility, and transparency were also evaluated.
The verdict: most policies were merely "satisfactory." The primary reasons for the disappointing performance? High costs. Expensive insurers can't deliver a high pension.
Only three policies earned the "good" quality rating: Europa E-RCP (€218 monthly pension), Hannoversche Bausteinrente R4 (€240), and Die Bayerische KlassikRente 25867 (€220). Test winner Europa boasts low costs, resulting in a favorable yield. Allianz, on the other hand, has costs that significantly reduce the yield by 1.24 percentage points compared to Europa, which is almost four times as much (€204 monthly pension, "satisfactory"). Hannoversche offers the highest guaranteed pension, but falls short on flexibility and transparency.
In the event insurers don't pay out more than the guaranteed pension, customers need to live well beyond 90 years to break even, even with a good policy from the comparison.
Sources: ntv.de, awi
Insights:
- Stiftung Warentest evaluates pension insurance policies based on guaranteed monthly pensions, premiums, coverage terms, and insurance provider's financial stability.
- Allianz's PrivatRente Perspektive offers flexible premium payments and the potential for higher returns, but may have high premium costs and investment risks compared to other policies.
- Rürup Rente, offering tax benefits for retirement savings up to a certain amount annually, is another noteworthy option for retirement planning.
- Stiftung Warentest's evaluations consider factors like guaranteed minimum monthly pension amount, premium costs, investment risk, and flexibility when rating pension insurance policies, aiding consumers in making informed decisions.
Community policy should be considered carefully when planning for retirement savings, as the high costs and potential risks associated with private pension insurance may outweigh its benefits. Vocational training, on the other hand, could play a crucial role in improving one's personal-finance situation by acquiring skills that lead to higher-paying jobs. For instance, one might opt for vocational training in financial management or investment planning to better understand and manage their retirement savings more effectively.
