Riester-Rente termination (moving out)

2 posts in this topic

Hi.

 

I moved to Germany together with my girlfriend a few years ago. We also set up the Riester-Rente. I am already for some time thinking that it was not the best idea, because the advantages are not so great. Now we are about to move to another (EU most probably) country. We used the Riester-Rente also to get some tax advantage. Since we are going to be in another country, the tax discount cannot be used anymore, so it will lose a big plus. Now my questions are:

 

How can we minimize the loss of terminating the Riester-Rente? I was told that I can use the money to buy a property, but is it possible to do it without signing for a loan or mortgage with them?

 

I don't really need the cash now, but to pause the Riester for 30 years doesn't seem to be a good idea. No government contribution, only interest, which probably won't beat the inflation... And I suppose I will have to pay income tax from it later when i will get my pension, right?.

 

So in the end it seems to me that I will lose the state contribution, some fees of the provider and I will have to pay back the tax advantage.

 

Thanks for comments!

 

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if you move to another EU-member-state you can just freeze the RIESTER-plan. If keeping the capital there is a good deal or not depends of course on what kind of plan you have with what initial and ongoing costs. It might make sense to pay some extra fees and switch it to a different kind of RIESTER plan with better investment options for the long term.

The good news is that when waiting for this investment to grow, you'll get the payout later based on the full "Zulage" (direct subsidy) and all because other EU-member-state are to be considered like if staying in Germany.

If you move outside of the EU, though, it will become a different ball-game altogether. Because if you move outside the EU, you basically have to repay the ZUlage AND the tax advantages received at once (meaning this will be deducted from your accrued capital in the plan). Without that and due to the initial costs for the plans (commissions and all) it will then most certainly be a loss. But you can simply claim a deferral of the liquidation of the RIESTER plan by stating a (vague) intent to return back to Germany later in retirement.
That way the capital remains in the plan in full and continues to grow. And that means there are profits from your net investment as well as from the capital come out of the tax savings and the subsidy/Zulage. This will act like a profit leverage on your net-investment and can be significant over time... depending, as said above, what ongoing costs your plan has.

 

There are advisors here in Germany who can assist you with this in a transparent, fee-based consulting. Might be worth paying some fees to get clarification and perchance protect some good future profits in this plan for you.

 

Cheerio

 

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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