Members of the German Council of Economic Experts are urging the federal government to replace the existing Riester pension scheme with a new model for private retirement savings.
Instead of the currently planned early-start pension for minors, the council proposes the introduction of a “new, eligible retirement savings depot”. In a piece published in the Frankfurter Allgemeine Zeitung, economists Ulrike Malmendier and Martin Werding suggest that existing Riester contracts should be seamlessly transferable to the new system on a voluntary basis.
The economists, who serve on Germany’s leading economic advisory panel, argue that this shift could help restore confidence in state-supported savings programs, broaden opportunities for wealth accumulation across various demographics and foster a genuine investment culture.
The core of the proposed retirement savings depot would be a simplified, standardized product, drawing inspiration from the model successfully implemented in Sweden. The new system is envisioned as a natural progression following the planned early-start pension initiative.
The current Riester scheme has become synonymous with low returns, high costs and bureaucratic complexity. Data reveals that only 40% of eligible individuals hold a Riester contract and a quarter of those are no longer being actively managed. These figures indicate a significant lack of public trust in capital-based retirement savings subject to state-regulated frameworks. The proposed changes aim to address these shortcomings and create a more effective and appealing retirement savings solution for the German population.