GERMANY - Germans saving in the "Riester-Rente" are now allowed to take all the money saved, including the state subsidies, and use it to finance the purchase of a personal home.
Reforms to the legislative framework means as soon as the sum on a person's Riester account surpasses €10,000 they can withdraw that money to buy a flat or build a house for their own use, though 'buy to let' is not included under the new regulations.
The state subsidy element of the savings can subsequently be used as payments for mortgages or loans, under new regulation which were passed retroactively to come into effect from January 2008.
That said, hardly any Germans have yet reached that threshold, as a spokesman for the federal insurance association GDV explained to IPE.
The Riester-Rente was introduced in 2002 as an alternatives savings vehicle but hardly anyone contributed the highest contribution of around €2,000 per annum every year since then.
To date, 8.5 Million Riester contracts have been sold - 457,400 of those last year.
The basic state subsidy is now €154 per year, having just been raised earlier this year, while there are further subsidies for families with children.
Still, the GDV estimates "hardly anyone has saved €10,000 yet" as most people are contributing either only the minimum of €38 per year or just as much as the state subsidy amounts to.
According to the federation's spokesman, this makes it "impossible at this point in time to give a serious prognosis" about the potential withdrawal of funds from the system now that the so-called "Wohn-Riester" (housing Riester) has come into effect.
This new legislation came under criticism from the pension industry earlier this yea as officials fear it will further confuse people and divert money from other retirement vehicles, from which assets cannot be withdrawn before retirement. (See earlier IPE article: Promoting property as a pension is wrong - MetallRente)