Consumer‑rights advocates criticize the federal government’s plans for private retirement savings and call for corrections. They argue that the proposed annual fee cap of 1.5 % of the total savings could doom the new scheme intended to replace the Riester pension.
“1.5 % is far too high. It merely rewards banks and insurers” said Hermann‑Josef Tenhagen, editor‑in‑chief of Finanztip and a columnist for the “Süddeutsche Zeitung” (Saturday issue). He added that a 0.5 % ceiling would be entirely sufficient. The financial industry justifies its fees mainly by the costs of selling products and managing portfolios.
The draft pension‑reform bill from the finance ministry, spearheaded by Lars Klingbeil (SPD), would require banks and insurers to offer a standard product defined by the state. Savers would receive subsidies from taxpayers, and providers would be limited to a maximum annual fee of 1.5 % on that standard product. However, banks and insurers could still sell other products with higher fees and still receive subsidies under the plan. The bill is currently in the Bundestag and is slated for approval by the end of March.
Union and SPD parliamentary groups plan to respond to the criticism. “There’s plenty of evidence that we need to set the fee ceiling lower, at least for the standard offer” said Florian Dorn (CSU), a finance spokesman for the Union and a member of the federal pension commission. He noted that the 1.5 % ceiling surprised him in magnitude but that the new standard products should not become as expensive as Riester products. He expects some providers to offer standard products with effective costs of 0.5 % or less, and believes competition in the market will be decisive.
Within the SPD, calls for corrections continue, though spokespeople are reluctant to name individuals due to ongoing negotiations. “The 1.5 % cap is too high” sources well‑versed in the talks say, and they also push for a maximum of 0.5 %. Some claim even lower rates, such as 0.1 % or 0.05 %.
On the surface, an additional 1 % per year may sound small, but over the multi‑decade horizon typical for a retirement product, it can have a dramatic effect, especially when compounding interest is considered. Finanztip calculated illustrative examples for the “Süddeutsche Zeitung”.
For example, a family that saves €150 monthly, benefits from a grant for two children, and earns a 6 % return over 40 years, would end up with roughly €227,000 if fees were 1.5 %. At a 0.5 % cap, the balance would rise to about €295,000-a difference of almost €68,000. If fees were 0.2 %, the final sum could exceed €319,000-surpassing the higher fee option by over €92,000. Finanztip is run by the non‑profit Finanztip Foundation, whose mission is consumer financial education.