Unanticipated shift in stock exchange rates creates a novel chance for transformation
The new retirement plan, Altersvorsorgedepot, is set to be introduced by Finance Minister Christian Lindner in 2026, offering a modernised approach to retirement savings for existing Riester customers.
The Altersvorsorgedepot aims to simplify and streamline retirement savings by consolidating various products into a more flexible and transparent account structure. This can make it easier for Riester savers to manage their retirement assets.
One of the key advantages of the Altersvorsorgedepot is the improved investment options. Customers will likely have access to a broader range of investment choices, including more modern, low-cost, and diversified investment vehicles. This can potentially enhance the growth of savings compared to traditional Riester products.
The Altersvorsorgedepot also seeks to reduce costs and fees through streamlined management and increased competition among providers, thereby enhancing net returns for customers.
In terms of government support, the new plan maintains state subsidies and incentives, ensuring existing Riester customers continue to benefit from public funding. For instance, at least 120 euros must be paid in per year to benefit from the state subsidy, with a cap of 3000 euros per year and an annual allowance of 600 euros for a pension saver.
Moreover, those with an annual income of less than 26,250 euros could receive a bonus of 175 euros in the Altersvorsorgedepot. New entrants to the workforce could also receive an extra allowance of up to 200 euros over a period of three years.
However, it's important to note that unlike Riester products, the Altersvorsorgedepot does not have a guarantee for the preservation of the capital paid in. Also, derivatives and crypto investments are not allowed in the Altersvorsorgedepot.
The draft bill for the Altersvorsorgedepot, named pAV reform law, is expected to be approved by the federal cabinet by November and passed by the Bundestag and Bundesrat. The payout plan starting as early as 65 years is under discussion for the Altersvorsorgedepot.
Transferring Riester assets to the Altersvorsorgedepot could significantly reduce fees, especially for investments in globally investing ETFs. However, the implementation of this transition remains uncertain due to potential opposition from the SPD and Greens.
Lastly, capital gains during the investment phase in the Altersvorsorgedepot will be tax-free, but taxation of capital gains will occur upon retirement. The Altersvorsorgedepot will allow state-funded investments in securities like stocks, managed funds, and ETFs. There are also discussions about a basic and child allowance of 25 cents per euro paid in, up to a maximum of 1200 euros per year, in the Altersvorsorgedepot.
In summary, for Riester customers, moving to the Altersvorsorgedepot from 2026 means benefiting from a modernised, cost-efficient, flexible, and transparent retirement savings vehicle while retaining key government support features. However, it's essential to understand the differences between the two systems and consider the potential risks and benefits before making a decision.
In the context of the Altersvorsorgedepot, investors may find an improved investment landscape compared to traditional Riester products, as the new plan offers a broader range of modern, low-cost, and diversified investment vehicles that have the potential to boost savings growth. Moreover, personal-finance management can be streamlined with the consolidation of various retirement products into a more flexible and transparent account structure.
