Life insurance more popular than Riester pensions
GERMANY– The life insurance funds business in Germany is enjoying something of a renaissance as people favour them over Riester private pensions funds as a means of investing for their retirement.
The association of German insurance companies (GDV) says sales of life insurance funds accounted for 28% of total sales in the private pensions industry in the first six months of this year, compared to 23% for the same period the previous year.
Increased market volatility and lack of information about the Riester plans are driving people back to the traditional insurance pensions products.
A spokesman for insurance group Axa-Leben, which has seen the number of life insurance pensions policies it has sold thus far this year increase by 22%, says renewed interest in life insurance funds is unsurprising.
“Everybody has been harping on about the new capitalised private pension funds introduced as part of the Riester reforms and how the take up rate has been disappointing. But that doesn’t mean people haven’t been thinking about their retirement,” he says.
He adds that the Riester reforms opened up a lot of debate and awareness of the need to save at all levels but that people seem wary of investing in the new pension funds whilst the equity markets are unstable and in decline.
“We must remember that investing in funds this way is new for Germany. Whilst the markets remain volatile, people are remaining loyal to the traditional retirement vehicles they know and understand. After all, the new pension funds aren’t the only product out there.”