01/12/2011
By Ilonka Oudenampsen
Saving for retirement with German Riester funds is worthwhile, according to CEO of the German Association for Investment and Asset Management BVI Thomas Richter, who has responded to criticism of the German Institute for Economic Research (DIW) who found that life expectancy is overestimated in some Riester saving methods.
"The criticism on the Riester funds sends a wrong signal to the citizens. Young people in particular should make provisions in addition to the state pension. Therefore, the private pension plans need to be promoted," said Richter.
He noted that the criticism of the DIW was related to insurance offers. The new method, used since 2011, overestimated life expectancy of those with Riester insurance. Due to the unrealistically long life expectancies that were used to calculate the benefits, the insured got unreasonably low payments, the DIW said. Only when an exceptionally high age was reached, they could earn back all their insurance payments.
Richter added: "The criticism of the DIW does not apply to funds. Riester savers with investment funds should not let the discussion unsettle them. Even more so, because investment funds with value assets, like equities and real estate offer inflation protection."
Riester-Rente is the colloquial term for a government grant-aided privately-funded pension scheme in Germany.
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