Riester Rente vs. other pension schemes

228 posts in this topic

Hi all,

 

the Eichel - Comfort Rente is a good idea - but you should never do it with the program Siemens offers to employees - this is very bad for you and very good for the insurance and the person that sells it to you.

 

Please get in contact with me - you can save more than 1.000 € signing fees by just choosing the right insurance in this field of Eichel / Rürup-Rente. And if you really want to chosse the Eichel-rente you can also contact me and receive a full refund of the fees.

 

The Eichel- or Rürup insurance works similar to the german Gesetzliche Rentenversicherung and about 72 % or 74 % (rising 2% per year)of the amount payed can be deducted from the "Brutto-Einkommen" that will be taxed.

 

Please choose at least a version where you have no more than 5 % fees of the current payment.

 

A fair insurance broker offers you a version where the insurance broker does not earn a single buck or Euro and all fees are elimininated or make a contract that guarantees that you get a full refund of all fees the insurance broker or advisor receives.

 

I can help you if you are interested.

 

Best regards danny bauer from Erlangen

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Greetings, danny! I´ve also pointed out before that the way forward - at some stage in this country - will be the Honorarberatung (paying for objective advice ) but that´s a long way off. Meanwhile, why do you think it´s fair that an insurance broker should earn absolutely no commission for selling pension plans à la Rürup , for example? There´s a lot of know how involved in providing an insurance/ brokerage service. It costs money to run a company and is time-consuming. Much of our daily work is done free anyway ( advice by email/skype, on the phone, correspondence and all the rest of it, visiting specialist seminars etc ) - not to mention there are taxes to be paid out there, software to pay for and there´s the issue of liability and the related expensive professional liability insurances!!!

 

Just to be very direct and transparent: are you an Honorarberater? Or a broker?

I am a professional independent insurance broker and authorised advertiser. Contact me.
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Hi

 

to be a fair partner for a customer it is possible for every free broker to offer all four ways of payment to any customer.

If a broker does not offer all versions it might be a good idea for everybody to KNOW that there are other ways of doing service - that might be done somewhere else. But if you feel well or better with a limited offer it might be the best choice for you.

 

1. Normal war (as done for a long time):

Hiding all costs that are built and calculated within the product - the costomer is quite used to that but most of the time does not know, what the broker earns.

(not all signing fee costs are accrued within the first 5 years)

 

2. Advanced way:

Sell cost reduced tariffs like Gruppentarif or similar products

(all REDUCED signing fee costs are accrued within the first 5 years)

 

3. Highly Advanced way:

Choosing a product with reduced costs or with costs that are equally spread out in constant rates over the whole time of the insurance - based on a certain clear percentage of the current payment (and not all signing fee costs are accrued within the first 5 years)

 

4. Real Honorarberatung

Show all signing costs and all running costs and tell the customer all earnigs that a broker or Honorarberater receives (which SHOULD be done in a absolutely clear and transparent way anyway - but all insurances try to find ways not to tell everything in a clear way).

Find a agreement with a broker or Honorarberater how to pay the service and work - on a fair way - as any Tax Consultant or Lawyer is doing it for years - but they have a fixed cost and fee table, which makes it easier.

 

All 4 ways of customer consultancy can be done by any broker - if he or she wants to act that way.

 

Anyone who understands that every broker has to make ends meet does not have a problem to pay for the service - just the freedom of choosing between 1 2 3 or 4 ist a good idea.

 

By the way - if you choose no. 4 --> it is clear that the consultant does not have to sell anything which is bad for the customer as the time and the know - how or the service is payed - not the selling itself (as done - for example - at a lawyer).

 

What is your way of conduct?

do you offer version 1 to 4 to customers? --> no. 4 could give both sides the security to do or receive a perfect job with a wonderful outcom.

If you get payed by the customer - even if the customer decides not to buy - could be a charming choice for a broker too.

 

but of course - also no. 1 2 3 can be a good way of doing work with the customers.

But it is likely that the job could be done even better with rising numbers.

 

So to come back to your question - it does not matter - every broker can do Honorarberatung too - and some insurance companies offer tariffs for this specific group of customers in addition to the usual tariffs.

 

regards danny

 

P.S. and to make it clear - the consultant has to be payed in every version of consultancy - some might prefer no. 1 - others no. 2 3 or no. 4 - it just depends of the aims and the different know-how.

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Danny: one correction - as a broker under § 34 D GewO just MUST NOT offer also "Honorarberatung", i.e. fee based advice on insurance related products. And these plans you describe are insurance reltated products and not mere investments in equity funds.

Honorarberatung falls under § 34 E GewO and both licenses cannot be obtained by the same person or company. So, offering purely fee-based advice while being registered as a broker is a breach of current laws and could get you/whoever does it, into serious legal trouble.

 

having said that: personally I find this separation total nonsense and it is basically slowing down the process from commission based advice to more fee-based advice in the overall market, which I find sad as in my opinion somewhere down the road we need to get to a purely fee-based system of advice in finance just like lawyers, notaries or tax acountants.

But I would be rather sceptical of anyone in finance who disregards the current laws in such a cursory way... no offense.

 

As broker, we never offer option 1 - because I think it is extremely wastefull for the clients and reduces overall performance of such plans too much.

What we do offer are

I. a plan where the costs -as you point out correctly - are striclty pro-rata/pay as you go because that keeps the clients flexible in their investment planning for the future.

II. or we set up plans with a low monthly fixed premium for RIESTER and/or RÜRUP plans and then the client adds major lump sums one or twice a year. That way only the low fixed premium is the base for the initial front-loaded costs whereas the client pays for the lump-sum about the same fee as he would in a plan under a pro-rata-regime.

 

The second option comes into play if we want, together with the client, to have a particularily good and broad selection of investment funds because the pure pro-rata-plans I know are a bit of a blind-pool investment, mostly.

 

Cheerio

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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Dear Starshollow and other interested chaps,

 

you just write what most people say and write, but you are - sorry to say - NOT RIGHT.

 

As you might not believe what I say - I can state just some examples:

 

Every broker is free to choose a plan with reducced cost or no cost. You do not need a different registration for doing this.

Every broker can choose so-called "Haustarife" , and some modern insurance companies offer saving plans without earnings that are given to the broker - it is clear that the broker should be paid by the customer when offering this product without earnings!

And in some situations this might be a good choice for both sides.

 

Every broker is legitimated to do so - this ist absolutely clear and withtout any questions possible - for sure.

 

Specialised people / experts in this field know exactly what I'm talking about. You might not know about these possibilities.

 

Of course, most brokers never want to do that as it is absolutely contrary to the usual procedure which has been in place since decades or centuries - but today there are more and more offers to be found in the internet - even with fund investments without any fees or start-up costs or with just a minimal percentage of the usual 5 % Ausgabeaufschlag - this is also possible for some Riester - plans and Rürup - plans etc.

 

Every well informed private person knows this or can find this. Even the very well known publications of www.Finanztest.de and other magazines publish this information nowadays and recommend to use the rebates or free offers in the net.

 

no worries danny

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If you want to see how insurances are not to be sold, you should watch the program "Menschen hautnah" tonight at 22:30 on WDR. It's about the company MEG.

 

Also, my small question in post 100 wasn't answered yet, but it can wait :).

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In Answer to Post #100 (Lukeskywalker) if you decide to retire outside the EU you would have to pay back any tax benefits and all the Riester bonus would also be deducted meaning a reduced pension.

 

Here is the appropriate text in German

 

Ruhestand im Ausland jetzt auch förderunschädlich

Der Bezug der Riester-Rente im EU-Ausland ist förderunschädlich möglich. Im September 2009 hat der Europäische Gerichtshof Ungerechtigkeiten beim Bezug der Riester-Förderung beanstandet. Der deutsche Gesetzgeber hat nun reagiert und die Riester-Rente weiter verbessert.

 

Bei einem Umzug ins Europäische Ausland kann weiterhin die Riester-Rente bezogen werden, ohne dass die erhaltenen Zulagen und Förderungen zurückgezahlt werden müssen. Voraussetzung ist, dass der Sparer in ein Land des Europäischen Wirtschaftsraums auswandert. Dazu zählen

 

EU-Staaten

Island

Liechtestein

Norwegen

Wird der Wohnsitz in ein Land außerhalb dieses Wirtschaftsraums verlagert, so gilt die alte Regelung, dass die erhaltenen Zulagen und ggf. Steuervergünstigungen zurückzuzahlen sind.

 

So if you retire to an EU country or one of the other above mentioned countries, no loss incurred.

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Thanks Enview. I knew that already. Can you answer the same question for Comfort-Rente ("Eichel-Förderung")?

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Meanwhile, I also looked into the possibility of "ComfortRente" (Eichel-Förderung) as extra pension. This comes very close to what I had in the Netherlands. If I plan to retire outside the EU, I wouldn't have a possible loss of tax benefits with the Riester Rente. Can this be confirmed?

 

The EICHEL-'Förderung relates to a company pension scheme/betriebliche Altersvorsorge in the way of a Direktentgeltumwandlung. To this regards you have the tax savings at one (in contrast to RIESTER and RÜRUP) as your employer takes the money directly from your gross salary and puts it into the pension plan, including the share of taxes and social welfare contributions that you would usually "lose" out of this amount. Since you can either decide to cash in entirely when you reach pension age or draw an annuity/pension for life, both of which are taxed at source here in Germany, you can't have a possible loss of the tax benefits received already, regardless of where you live.

 

 

Dear Starshollow and other interested chaps,

 

you just write what most people say and write, but you are - sorry to say - NOT RIGHT.

 

As you might not believe what I say - I can state just some examples:

 

Every broker is free to choose a plan with reducced cost or no cost. You do not need a different registration for doing this.

Every broker can choose so-called "Haustarife" , and some modern insurance companies offer saving plans without earnings that are given to the broker - it is clear that the broker should be paid by the customer when offering this product without earnings!

And in some situations this might be a good choice for both sides.

 

Every broker is legitimated to do so - this ist absolutely clear and withtout any questions possible - for sure.

 

Specialised people / experts in this field know exactly what I'm talking about. You might not know about these possibilities.

 

Of course, most brokers never want to do that as it is absolutely contrary to the usual procedure which has been in place since decades or centuries - but today there are more and more offers to be found in the internet - even with fund investments without any fees or start-up costs or with just a minimal percentage of the usual 5 % Ausgabeaufschlag - this is also possible for some Riester - plans and Rürup - plans etc.

 

Every well informed private person knows this or can find this. Even the very well known publications of www.Finanztest.de and other magazines publish this information nowadays and recommend to use the rebates or free offers in the net.

 

no worries danny

 

Hi Danny,

I have to apologize as my answer was indeed not entirely accurate.

There is a special status in Germany as a truly and only "Honorarberater" which is an entirely fee-based process of advice for insurances. This is a particular status and cannot be merged with the status of a broker. So you either are a broker under § 34 D GewO or a Honorarberater under § 34 E GewO.

However, and to this regards I was wrong and you are right: if as a broker you offer someone an insurance contract WITHOUT a commission from the insurance to you (Netto-Vertrag) then you are obviously entitled to set a fee for your work based on either an hourly rate or a lump-sum in order to receive reimbursment for your efforts.

So, yes, a broker can charge a fee for certain services - he just must not call himself a Honorarberater, that could get him into trouble as that is a protected profession.

 

As I said, I have been a strong promoter of RIESTER and RÜRUP plans without frontloaded costs here on Toytown for years - as can be seen in my many contributions to this regards - and we at CR&Cie have amongst our clients maybe 1 - 2 % only who signed up for plans with frontloaded costs by their own choosing AFTER having received quotes from us for both, plans with and without front-loaded costs. All the rest are signed up for plan with no or strongly reduced initial costs as nothing else makes sense for Expats (but also for most Germans, too).

 

Thus, I stand corrected because I explained myself above a wee bit inaccurate.

 

Cheerio

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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Thanks for the clarification! I think I go for that instead of Riester. It's a collective insurance offered by my employer and no provision will be charged. Annual administration costs are ca. 3% which I find acceptable. If I go into pension the admininistration costs are 0,75%.

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Going back to Danny and Starshollow: so what about if a client just needs Haftpflicht? Doesn´t need anything else, doesn´t want anything else? Should he/she pay for an Honorarberatung (200-300-1000 euros or whatever ) or just accept a broker will earn 8 or 9 euros or whatever (before tax!)? This is often the case with expats coming just for a year or two.

I am a professional independent insurance broker and authorised advertiser. Contact me.
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Thanks for the funny idea - i would like to see someone like you struggling to find arguments for this wonderful idea to sell a cheap product for a tag that is times as much as the price of the products price itself anywhere else down the street.

 

Nobody would try to buy one of the about 20 different brands of paintings that are offered in a specialised store at a price that is unbelievable high - it would always be cheaper and better to choose the most expensive brand instead. Nobody would even think of going into that store, where you can only receive a product if you pay a advice fee that is much more than any product offered.

--> this level of discussion to talk about totally unrealistic situations does not help - bashing usually does not help anybody.

 

--> lets think about a free choice between different ways of payment - if one for real bigger amount of money savings for Riester, Rürup, Eichel, fund savings ... and insurances to save for your kids or for your pension. These saving plans usually - most of the time - come along with a indeed huge payment to the insurance of investment broker. Any person involved in this should understand this very well.

 

- it is not to discuss about a cheap and good insurance that anyone can find somewhere in the net anyway. And even if you pay a broker a few Euros for selecting one - in this case there is a good reason to do so.

But if you save more money for any aim or person - doing this it is a good idea to have a free choice between different ways of payment for the (broker) service.

 

danny

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Danny - I´m not bashing you - far from it. Again, the idea of Honorarberatung is an excellent one and its day will come here when it is accepted as routine!

Ok, a bit of bashing (just a teenie bit!): :D why is what I wrote unrealistic? It happens every day. I get enquiries from people who have health insurance in place and who have heard it´s a good idea in Germany to have public liability insurance - they´re often not sure of the German for it but anyway...so they are definitely people I would not recommend using the internet to find one. They don´t usually know the components of one and what to look out for.

 

You may be saying that because you´re German and grew up with private Haftpflichtversicherung - that is NOT the case with 99% of expats on Toytown.

 

So wat nu? Charge them an Honorarberatung for that?

 

This is a serious point - what to charge for? Where does it start?

I am a professional independent insurance broker and authorised advertiser. Contact me.
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Yesterday, I saw an item on the ZDF program WISO which was about different types of Riester. It was very critical on the "fundsgebundene" type, this is the type related to e.g. shares. Acquisition costs are high and throughout it's life-cycle you deal with high annual costs which impact your investments in a negative way. It's also the type where banks and insurance companies earn the most, so beware of that if you talk to your bank.

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I don't know whether Danny Bauer or starshollow are still active here, but in the hope-

 

-what about the minimum paying-in levels for the german pension? if i am already over 35 and won't manage 30 years payments is it still worthwhile joining KSK and paying in to the pension fund?

 

- are Rürup plans available/ advisable for freelancers?

 

Many thanks and happy new year!

 

Patience

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hi Patience,

 

I have two brothers living in Berlin - I plan to be there in the next few weeks again.

 

If you prefer to call me at 09131-920 90 88 I can give you hints what to do and where to look for the best solutions in order to avoid costs ...

There are quite a few really good offers without or with minimal cost.

joining KSK is a idea - it might be a good idea - but you have to careful - the first step towards the KSK should be the right - it is likely not to be possible to change your KSK-status afterwards ... (health insurance contributions and payments from the KSK to you included).

 

My email is danny.bauer@usa.net

 

best regards

 

danny

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Dear all,

 

Concerning the question of retiring outside of Germany but in EU countries does the new law of non-repayment of tax refunds/other tax advantages apply to Rürup-Rente and VL-Plans as well as Riester-Rente pension plans referred to previously?

 

In terms of Rürup Plans it seems as though there is only the DWS-BasisRente Premium on the market without front-loaded costs apart from the usual 5% deduction for each payment. I am not sure how different it is from the DWS-TopRente Riester plan that is often referred to.

 

Many thanks.

L

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OK having spent a lot of time researching all of this pension stuff here's a basic overview which would help if you American or Canadian (sorry don't know the British equivalent)

 

A Riester or Rurup pension is more or less the equivalent of 401K or IRA or RRSP (for Canadians) Basic idea is that the government is encouraging you to save for old age. Like Canada/US you get a tax break for putting money in. Also like in Canada/US fees will eat you alive, this is especially true in Canada where the average fees are a nose bleed 3%. Also you get a tax break for contributing money (or more correctly the money that goes in is pre-tax)

 

The main differences from what I can tell is that a Rurup (not sure about a Riester) is that is is closer to a DC (defined contribution) or LIRSP (Locked in RSP) pension plan, in that once the money goes in it can't be removed and creditors can not access it either.

 

Secondly once you turn 65 it converts into an annuity (correct me if I'm wrong on this one). In my case I set up a Rurup with Johng and he quoted me a pension ranging from 300 to 700 a month depending on how well the funds do. Of course a annuity means that once you die the money remains with the insurance company, do well and die at 65 you bequeath a big gift to the insurance company, live to a 102 and they're the ones hurting.

 

What I'm not sure on is how the income is taxed once you retire. In Canada RSP w/d are taxed as regular income.

 

Thanks

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You can actually start drawing your pension at reaching the age of 63 at the earliest or defer your pension receiving for a few more years to 70 or what not, if you so like. Obviously that decision will decrease or increase your guaranteed monthly pension as a result.

 

 

There are two cases of death to consider here:

1) you die before you start drawing a pension

2) you die after you started drawing a pension

 

1) in this case, your spouse can "inherit" the capital from the plan into her own RÜRUP plan, i.e. the capital is not lost to her, but she can only use it herself for pension purposes.

 

2) in this case you can set up right from the beginning a specific period of time during which - in case you'll kick the proverbial bucket - your spouse still receives the full pension for a number of years. Obviously this is like an inherent extra life-insurance of sorts, hence your pension will be a bit lower. Also your spouse should receive in case of your death without this extra provision a "widow" pension similar to the rules of public pension, i.e. a certain percentage of your contractual pension for the rest of her life.

 

 

Currently only a percentage of the income is taxed but this goes up every year and will soon reach 100% - i.e. all your pension income will then be liable for income tax.

 

Cheerio

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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thanks for the updates, one more quick question

 

A Riester pension is for employees and the company government chips in some money as well, sort of like a 401K match in America correct?

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