According to financial experts, Riester and Rürup savers need a lot of patience in the fight against inflation, as state-subsidized retirement provision products hardly compensate for inflation.

According to financial experts, Riester and Rürup savers need a lot of patience in the fight against inflation, as state-subsidized retirement provision products hardly compensate for inflation.

According to a report by www.sueddeutsche.de, Riester and Rürup savers have a serious problem with inflation. A study by the citizens' movement Finanzwende shows that most state-subsidized retirement provision products are unable to keep up with inflation. Only two Rürup products achieved a return of more than two percent, while not a single Riester pension insurance company was able to overcome this hurdle. The returns on the products examined ranged between minus 0.11 and plus 1.83 percent annually for Riester contracts and between 0.31 and 2.87 percent for Rürup contracts. This is due, on the one hand, to high costs in the savings phase and, on the other hand, to unfavorable assumptions about life expectancy during retirement. However, state funding and tax deductions were not included in the assessment. Experts warn that, in their view, the Riester and Rürup pension system “cannot be saved” and are calling for clearer requirements for state-sponsored pension contracts. The federal government is planning a reform of state-funded pension provision this year based on expert suggestions from 2023.

The implications of this study for the market and the financial industry are significant. The lack of profitability of Riester and Rürup products could further undermine consumer confidence in state-sponsored retirement provision. This could lead to increased interest in alternative pension products that offer better returns. In addition, the pressure on the federal government is likely to increase to quickly implement the reform of state-sponsored pension provision in order to restore citizens' trust.

The results of the financial transition study underline the need for a comprehensive overhaul of the existing system of state-sponsored pension provision. Clear requirements for pension contracts regarding returns in the retirement phase are essential to ensure that pension products actually meet the needs of consumers. It remains to be seen to what extent the planned reform of state-sponsored pension provision will meet these requirements and how it will impact the market.