Demand for Germany’s Riester pensions surges
GERMANY – Demand for the Riester-Rente, a government-subsidised private pension launched in 2002, has increased dramatically this year, the German finance ministry has reported.
According to the ministry, 542,000 Riester contracts were sold in the first nine months of 2005 – or more than twice the number sold in all of 2004. All told, 4.7m Riester contracts have been sold since launch, representing roughly 15% of its market potential.
Underscoring generous government support for Riester, the ministry also said that between January and mid-November of 2005, it had paid out €551.5m in subsidies.
Meanwhile, Allianz, Germany’s largest insurer, said that judging by its sales figures so far this year, the Riester pension was “experiencing a renaissance”.
Between January and mid-November, Allianz sold 100,000 Riester contracts – or seven times the number for the same period a year ago. The insurer has sold 700,000 of the contracts in all.
The sudden rise in demand for the third-pillar version of Riester follows improvements made to it by the government last year. These include allowing greater portability, streamlining the criteria for subsidies and lifting a requirement on monthly contributions.
Regarding demand for second-pillar pensions, a recent study said that in mid-2004, around 60% of German salaried employees owned some type of corporate pension, up from 38% at the start of 2002. The increase was partly driven by demand for the second-pillar version of Riester, known as “Entgeltumwandlung” in German.
The statistics on Riester contrast with claims made yesterday by German fund industry association BVI that the pensions were not helping to boost second- and third-pillar coverage in Germany.
Separately, Allianz announced that from January 1, 2006, it was launching a new holding company for its alternative investment activities, including private equity, real estate finance and structured finance.
The new unit, called AAA-Holding, will take management responsibility for Allianz Capital Partners (mezzanine and leveraged buyouts); Allianz Private Equity Partners and Aequitas (private equity); Allianz Immobilien GmbH (German Real Estate); and KGAL (Leasing).
Karl Ralf Jung, board member in charge of corporate banking at Allianz’s subsidiary Dresdner Bank, will head AAA-Holding. Thomas Pütter will become the new unit’s other managing director, while remaining chief executive of Allianz Capital Partners.