Ahead of the launch of the new state-supported retirement savings account early next year, the German Social Association (SoVD) has issued warnings regarding potential risks for those participating in the system.
Michaela Engelmeier, Chairwoman of the SoVD, told journalists from the Funke media group that retirement provision must not turn into a trick where providers benefit while the savers bear all the risk. Before the new retirement savings depot even goes live, there is already a sensation that the competition is increasingly focusing on gaining market share and maximizing profits, rather than prioritizing the interests of people genuinely trying to save for their later years. However, the new depot is intended to reach people who previously lacked private savings and often come with reservations, requiring considerable advisory support.
Engelmeier stressed that if necessary consultations are only available against high fees, which would significantly diminish potential returns and degrade the outcome for savers, the goals of the reform will fail. She asserted that for the system to succeed, there must be maximum transparency, consistently low costs, and clear regulations to prevent favorable entry conditions from being undone by steep fees later on.
The state-supported retirement savings program begins on January 1st, and banks, brokers, and insurance companies are aggressively promoting their various offerings. The federal government aims to strengthen private retirement savings by encouraging investments in the stock market. This new retirement savings depot replaces the previous Riester pension, which was criticized for having excessively high ongoing insurance costs; policies from the old system can either continue or be transferred to the new depot.
