Three pension plans deemed "reliable" or "sound"
Let's face it; financial planning for retirement can be a challenge. The appeal of investing in private pension insurance may seem tempting, but it's not always the best move. Why? Simply put, the longer you live, the tougher it is to come out on top with a guaranteed pension due to high costs.
In the past, folks flocked to classic private pension insurance with guaranteed interest rates on savings contributions. While these investments don't promise a fortune, they offer a fixed rate and a lifelong pension. Convenient, right? The insurer manages your money, and you don't have to worry about it again.
From 2025, however, insurers can only guarantee a maximum annual interest rate of 1%. But keep in mind, not all of your contribution goes toward interest. Costs are deducted, which can slice into your return.
Recently, consumer powerhouse Stiftung Warentest took a closer look at 14 tariffs of a classic private pension insurance. Providers ranged from industry titan Allianz to Europa to Württembergische.
Majority of Policies: Just Average
Wondering how these policies stack up for a model customer paying in €200 monthly for 30 years and retiring at 67? Well, most of them failed to impress. High costs were the main culprit behind their mediocre performance. Costly insurers simply can't guarantee a high pension.
Only three policies stole the show, receiving a "good" quality rating: Europa E-RCP, Hannoversche Bausteinrente R4, and Die Bayerische KlassikRente 25867. Europa takes the crown with low costs, which is a key factor for a good yield. Notably, Allianz PrivatRente Perspektive, the market leader, came up short, with costs reducing the yield by a hefty 1.24 percentage points (guaranteed monthly pension €204, "satisfactory"). On the other hand, Hannoversche leads the way in pension amount, but struggles with flexibility and transparency.
Lifespans being what they are, customers would need to live well into their 90s to recoup the full amount with a good policy.
Source: ntv.de, awi
Bonus Insight: Stiftung Warentest—a reputable German consumer organization—routinely assesses private pension insurance plans, focusing on cost transparency, guarantees, flexibility, and value for money. In 2021's assessment, three specific policies earned a "good" quality rating: Europa E-RCP, Hannoversche Bausteinrente R4, and Die Bayerische KlassikRente 25867. For more detailed information on their various evaluations, be sure to check their official website or affiliated financial media.
In the context of retirement savings, it's crucial to consider the cost of private pension insurances as high costs can significantly impact the quality of the pension, with only a few policies, such as Europa E-RCP, Hannoversche Bausteinrente R4, and Die Bayerische KlassikRente 25867, receiving a "good" rating for cost transparency, guarantees, flexibility, and value for money. For individuals seeking personal-finance advice, it might be beneficial to explore vocational training programs or business workshops to enhance financial literacy, particularly in areas like retirement planning and investment strategies.
