Former Social Minister Walter Riester-after whom the Riester pension scheme is named-denounced the newly passed reform of private retirement savings. Speaking to the “Frankfurter Allgemeine Sonntagszeitung”, he said the government had let “another opportunity to cut costs slip by again”. He argues that making private pension plans mandatory would lower distribution costs, because advisers would no longer need to persuade investors that the products are necessary.
Riester also noted that saving for old age competes with current consumption needs and obligations. “Without private savings, many people face old‑age poverty because the statutory pension is insufficient for all. Then the state has to step in with tax‑funded help” he said.
The reform’s reduction of the cost cap for the standard pension product to one percent drew particular criticism. “I think that’s too low” Riester said. “Good advice on pension products is important and it does cost money. If the cap is set too low, no provider will sell it; instead they’ll promote other products outside the standard scheme”. He cited the statutory German Pension Insurance, which spends €5.2 billion on pension administration against contributions minus a €280 billion tax subsidy-an expense rate of 1.8 percent.
Riester defended the guaranteed 100 percent return of existing Riester contracts at the start of the pension period and criticised the reform’s allowance of guarantee‑free products. “Contributors and taxpayers should retain assurance that, at least during the accumulation phase, their money is not lost”. He linked many contracts’ unattractive yields to the lack of such guarantees.
However, Riester welcomed several positive measures. He praised the inclusion of self‑employed individuals and employees of professional pension funds in the newly supported retirement scheme, calling it “a first step toward integrating the self‑employed into statutory pension insurance”. He also appreciated the increased and simplified subsidies.
He conceded that the old rules had room for improvement, noting their complexity. “For instance, to receive the maximum subsidy, the savings amount and the bonus must equal four percent of the previous year’s income, and this had to be checked in detail”.