Dusseldorf The state pension system will be under pressure in the coming years. While 4.5 contributors financed a pensioner in 1970, in 2019 there were only 2.1 active employees. For the level of care not to drop sharply or contribution rates to rise sharply, federal subsidies for pension insurance would have to increase from €101.8 billion to €185 billion by 2045.
This would mean that half of the federal budget would go to the pension insurance system. The state would lose an enormous amount of room to manoeuvre. Anyone who works as an employee should not rely solely on state pension insurance. It is not enough for most people to maintain their standard of living.
In addition, the level of pensions will continue to fall in the coming years. The provision of private pensions is essential for people without assets. The rating agency Franke und Bornberg has examined and evaluated insurance companies’ old-age pension products for the Handelsblatt.
Private provision is the key to maintaining your standard of living in old age. There are two levers for success. That is, start as soon as possible and invest in the most profitable systems possible. In Germany, many pension products come with a capital guarantee.
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For example, the Riester pension. The problem: To map the capital guarantee, providers must invest a large proportion of capital in interest-bearing investments. However, these almost never generate any interest. “Products with a full capital guarantee do not make sense in an environment with low or even negative interest rates,” says Michael Franke, managing director of rating agency Franke und Bornberg.
Fund-based pension products offer great advantages
That is why savers should prefer products without guarantees. Interest investments, which are particularly popular in this country, are no longer popular: “Private pension insurances that invest in pure interest investments without any orientation to the capital market are not attractive in times of low interest rates”, Franke says. In principle, fund-based pension products offer great advantages.
Then savers can also invest in high-yield stock funds that achieve above-average returns over the long term. If you have a lot of time, you do not need to fear fluctuations. The insurance industry offers a wide range of fund-based solutions. If you have a high need for security, you can choose a premium 80 percent guarantee.
Just like Allianz’s “PrivatRente KomfortDynamik REKU1” product, which received the highest rating. Both financial strength and product are rated very good. “The provisioning concept offers an attractive balance of return opportunities and security,” says an Allianz spokesperson.
The insurer’s investment experts manage the portfolio and select the funds. To represent the guarantee, part of the capital is allocated to the guarantee assets of the Allianz life insurance. Ensures that 80 percent of contributions paid are available when you retire.
In Allianz’s product “PrivatRente InvestFlex with RF1GD guarantee”, which also received a very good rating, investors help shape the capital investment. You can choose from several managed pension funds and accounts. “The division between the fund’s investment and guarantee assets is reviewed every business day so that the guarantee payments are guaranteed at the beginning of the pension,” explains the Allianz spokesman.
Life annuity insurance without endorsement scores with more margin
With Gothaer Lebensversicherung’s “GarantieRente Index” product, investors can choose between four different indices and combine up to two. The guarantee is represented by the monthly change between the coverage pool and the indexed pot.
Unsecured life annuity insurance has much more room for maneuver when it comes to investing. This also applies to Europa Lebensversicherung’s “E-FR unit-linked pension insurance fee”, which received a very good rating. Investors can choose from 30 funds.
“In any case, the fund must be well rated and perform well, the costs must not be too high, the fund’s assets must not be too small,” says Thomas Pollmer, director of life product management at Continentale Versicherungsverbund. . Clients can choose up to ten funds. You can exchange funds up to six times a year for free.
With the “Ergo Rente Chance” product of Ergo Vorsorge life insurance, funds can be exchanged as often as you like for free. Also with this variant, the client is responsible for selecting the funds. You can choose from 60 different backgrounds for different regions and themes.
“In cooperation with Assekurata, we have developed a selection process for the funds. A good to excellent rating from recognized rating agencies is important,” says Oliver Horn, Director of Product Management at Ergo Voorge Lebensversicherung.
Investment professionals take care of the allocation
With Zurich Deutscher Herold’s “Vorsorgeinvest Spezial” product, savers can choose between individual funds and managed custodial account models. These portfolios reflect different opportunity and risk profiles. The equity share ranges from 30 percent in the balanced variant and up to 90 and 100 percent in the dynamic variant.
Here, the investment professionals assume the determination of the asset allocation, that is, the division of the different classes of assets. It is reviewed and adjusted monthly. “However, the client can switch to the deposit account model or individual fund selection at any time and build their fund portfolio themselves,” says Daniel Happ, senior investment manager at Zurich Investment Management. If he has a long time to build up his retirement provision, he should start with a high stock ratio and avoid collateral if possible.
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