The retirement savings account is being celebrated as a great success – and there is a lot to be said for it. But no product is perfect. If you want to decide for or against the depot, you need both sides. Here is the honest assessment after the coalition agreement.
The benefits
Up to 540 euros in funding per year. The state adds a whopping 50 cents to every euro deposited up to 360 euros, then 25 cents up to the upper limit of 1,800 euros. Anyone who exhausts the maximum funding limit will receive 540 euros for free – every year. At Riester the basic allowance was a fixed 175 euros.
Tax-free savings phase. No withholding tax on capital gains, no advance flat rate, no taxes when switching between funds. Compound interest works unabated for decades. In a normal portfolio, you pay taxes immediately every time you make a profit.
Full share quota possible. Up to 100 percent in ETFs on the MSCI World or FTSE All-World – without a contribution guarantee forcing you to invest in bonds. Historically, the MSCI World has never made a loss over 15 years.
Child allowance from just 25 euros. Families receive up to 300 euros per child per year, starting from a monthly contribution of 25 euros. With two children and 25 euros a month, over 1,000 euros end up in the deposit – with only 300 euros of personal contribution. Funding rate: 250 percent.
All self-employed people are eligible. Freelancers, entrepreneurs, freelancers – for the first time, self-employed people who are not required to have pension insurance are also allowed to use state funding. They were completely excluded in the first draft.
Flexible payout. Instead of the Riester requirement to retire at least 70 percent, you have the choice: payment plan up to 85, lifelong annuity or a combination. You can withdraw up to 30 percent as a one-off payment.
The disadvantages
No capital protection. Without a contribution guarantee, your portfolio can slip significantly into the red in the meantime. Anyone who gets into a crisis shortly before retirement has no protection against the downside. The optional guarantee products with 80 or 100 percent offer protection, but cost returns.
Money is tied up until 65. Although early withdrawals are possible, they are detrimental to funding: all allowances and tax advantages must be repaid. The retirement savings account is not a nest egg and is not a replacement for liquid reserves.
A cost cap of 1 percent is not a bargain. Anyone who uses the standard product pays up to 1 percent effective costs per year. Over 40 years, the difference to a self-selected ETF of 0.2 percent amounts to around 65,000 euros. The standard product protects beginners from the worst cost traps, but it is not cheap.
Full taxation upon withdrawal. In retirement, the entire funded assets are taxed at the personal income tax rate. In a normal portfolio, on the other hand, only the withholding tax with partial exemption is due – often significantly less. We explain how taxation works in detail in our guide to retirement savings accounts.
Limited selection of securities. Only funds in risk classes 1 to 5, EU government bonds and money market funds are permitted. Individual stocks, cryptocurrencies and leveraged products are excluded. If you want more freedom, you need a normal depot at the same time.
Conclusion: For those it is still worth it
The advantages outweigh the disadvantages for most savers with an investment horizon of 15 years or more. The combination of 50 cent allowance, tax-free savings phase and flexible payout is unique in Germany. The key is to take the funding up to the maximum limit and take the ETF selection into your own hands – then the retirement portfolio works for you instead of for the provider. All details, calculators and comparisons in the guide.
