Economy blamed for low Riester take-up
GERMANY – An independent think-tank has blamed the slow take-up of Germany’s private pensions products, Riester-Rente, on the weak economic situation and the products’ lack of simplicity.
“It is exactly those most in need of Riester-Rente, who cannot afford them,” said Achim Tiffe, head of the Hamburg-based Institute for Financial Services’ pensions department at a conference. “On one hand, Riester-Rente are most interesting for the lower income earners, yet it is exactly those people who do not have the means to take it up.”
Product suppliers and the government ought to be looking at this situation, because otherwise those at income levels where pensioner poverty is a concern will not be able to find adequate provision in retirement,” stressed Tiffe.
A study has shown that only nine percent of the population surveyed were contributing to a Rieste-Rente, a personal pension product named after labour minister Walter Riester. Fifty percent said they would want to take up a private pension product, but among other problems, it would depend on an improvement in their financial situation.
The slow take-up of the Riester-Rente products has frequently been blamed on their complexity. According to the Deutsche Gesellschaften fuer Hauswirtschaft, around 80% of application forms are filled in incorrectly.
The government must simplify private pensions, the IFF says, adding that, by building on financial education, knowledge and take up of retirement products will be increased, and it will be possible to avoid long-term pensioner poverty.