For newly established, state-subsidized retirement savings accounts, a maximum annual cost cap of one percent is planned. According to calculations from the comparison portal Verivox, if this cost cap is fully utilized, savers could potentially end up with less money compared to using a free savings account that receives no state subsidies, as reported by the Funke Media Group newspapers.
For example, a 25-year-old saver investing €150 monthly into an ETF savings plan with an assumed average return of 7.5 percent could accumulate approximately €496,000 by retirement at age 67, provided that a securities account without annual fees is used, and the monthly savings plan contributions are also free of charge. In the new subsidized retirement account, however, the monthly contributions could be €45 higher due to state subsidies, leading to an estimated fund value of around €645,000 at retirement, excluding costs. This means that due to state subsidies, investors would accumulate €149,000 more than if they saved without subsidies.
Similarly, a 45-year-old could save around €98,000 without subsidies, but thanks to state subsidies, the projected nest egg at age 67 could reach €127,000.
As part of the new subsidy scheme, the legislature has set a one percent annual cost cap. Verivox indicates that this can significantly diminish wealth accumulation. Using the same age 45 example, a one percent cost rate would result in a savings total of approximately €111,000 by retirement. Although this is calculated to be over €13,000 more than saving with a free account, over the 22 years until retirement, this scenario would see total costs amounting to about €16,000.
Analysis shows that costs have a particularly strong impact over longer periods. In the case of the 25-year-old, accumulating a one percent annual fee rate over the remaining 42 years until retirement would result in a fund of approximately €480,000-which is about €16,000 less than saving with a free account.
Oliver Maier from Verivox advises consumers to monitor costs carefully when choosing a retirement savings account, warning that selecting a product that exhausts the legal limit is crucial. While a one percent fee rate may seem manageable on its own, such a continuous deduction over years and decades can deplete enough capital to entirely negate all governmental subsidies.
Verivox based its analysis on a constant annual return of 7.5 percent, which is based on the historical performance of the MSCI World minus standard ETF fees. Taxes were not taken into account.
