For a long time, company pension plans were seen as the icing on the cake for retirement. But many offers are now discouraged. With these tips, you can find your perfect plan.
It’s amazing how people react to rewards. Sometimes all it takes is a small external stimulus for the nervous system in the brain to take over. It encourages us to act and releases happiness hormones in return. The principle also seems to apply when it comes to retirement provision. Not even 20 percent of Germans own shares and funds. But that could change radically if the federal government actually implemented one of its reform ideas, namely the retirement savings account. In a survey by Postbank, almost 60 percent said they would immediately start saving for their retirement with shares and funds as soon as the offer was available.
The retirement savings account is one of many initiatives with which the federal government wants to encourage private savings for old age. Every German citizen should soon be able to save freely, with stocks, funds and ETFs, and even with insurance if they want to. And they would receive generous subsidies from the state for this. Many financial experts and consumer advocates agree that this is a good idea.
High returns
Instead of continuing to tinker with the Riester pension or polishing the poor offers of numerous company pension providers, the state would enable every saver to save for their old age in an uncomplicated and profitable way.
However, the pension fund still has a long way to go through the political process. First, the relevant ministries must reach an agreement, then parliament will discuss it. One can only hope that the concept will not be watered down to such an extent between the conflicting interests of consumer representatives, unions and the financial lobby that it will no longer be recognizable.
Protection against wrong decisions
The traffic light government has set itself some goals in terms of pension provision, and has already implemented some of them – although rarely in the way that experts had initially suggested. So you can’t blame anyone if they lose track of things in the current reform chaos. But regardless of what is decided and how exactly, basically nothing will change in terms of preparing for old age: keep a clear head, do the math now and then and don’t jump at every convenience and reward – even if your nervous system reacts to it.
This also means checking whether your employer’s company pension plan is really attractive or just convenient. Calculating how much another year of part-time work will cost in pension terms. Considering whether the expensive equity fund your bank once sold you is really the best option. The so-called three pillars of retirement provision serve as a guide. If you keep an eye on them and make adjustments if necessary, you will protect yourself from making the wrong decisions.
Source: Stern
