GERMANY – The new private Riester pension funds in Germany have made a disappointing start, according to an article in the Frankfurter Allgemeine. The average monthly contribution rate stands at just €16 opposed to €108 for the traditional insurance funds.
The article says the private Riester products are proving bureaucratic and expensive to run, especially given that very little money is going into them at the moment. The current structure means that they are not sufficient to stand alone as pension provision vehicles.
The report suggests that a mix of established direct insurance and occupational pensions could prove more beneficial. The occupational and insurance schemes have greater investment potential, allowing higher returns on equities, and are designed to be tax-friendly. Furthermore, people should always read the small print, particularly with reference to costs, it says.