Scoring the Pricey Pensions: Only a Few Make the Cut
Just three retirement plans deemed satisfactory
Planning for retirement isn't a breeze. Countless individuals have signed up for traditional private pension insurance provision with guaranteed returns on savings deposits. They offer little financial reward but promise a fixed return and a lifelong pension. And, once the contract is sealed, there's no more sweat — the insurer handles the investments.
From 2025 onwards, insurance providers can only assure a maximum annual interest rate of 1 percent for new contracts. However, it's important to bear in mind that your entire contribution won't earn interest. Insurance companies first deduct their costs, which impairs the return.
The Stiftung Warentest scrutinized 14 insurance tariffs of traditional private pension insurance, ensuring that at least 90% of the contributions paid in are guaranteed to be available at retirement. The insurance companies assessed range from market leader Allianz to Europa to Württembergische.
Most of the Plans Get a "Meh"
In a simulation, we analyzed the guaranteed pensions that providers would offer if a customer injected €200 per month for 30 years (totaling €72,000) and began receiving the pension at age 67. The investment success and the insurer's costs, the flexibility, and transparency of the contracts were also evaluated.
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The verdict? Most plans were just "satisfactory". The main reason behind the mediocre performance? High costs. High-cost insurers can't guarantee high pensions.
Only three times was the quality rating "good". These are the "Europa E-RCP" (grade 2.2, guaranteed monthly pension 218 euros), "Hannoversche Bausteinrente R4" (2.3, 240 euros), and "Die Bayerische KlassikRente 25867" (2.4, 220 euros). Winner Europa leads with low costs, a plus for the return. Here, costs impair the return by only 0.32 percentage points, whereas market leader "Allianz PrivatRente Perspektive" suffers from 1.24 percentage points — a fourfold increase (guaranteed monthly pension 204 euros, "satisfactory"). Hannoversche boasts the highest guaranteed pension, but it falters in terms of flexibility and transparency.
If insurers don't pay out more than the guaranteed pension at the end, customers have to age beyond 90 to recover their contributions. Even with a top-rated plan, our model client would need to surpass 90 years of age to get their contributions back.
Pro Tip: For the latest rankings or reviews from Stiftung Warentest, consult their website directly or subscribe to their publications. You can also check out financial comparison websites like Verivox for detailed comparisons of various pension insurance options, tailored to your budget and needs. Additionally, a financial advisor can offer personalized advice to help you make the best choice for your retirement goals.
In light of the analysis, it's evident that many traditional private pension plans offer mediocre returns due to high costs, with only a few, such as Europa E-RCP, Hannoversche Bausteinrente R4, and Die Bayerische KlassikRente 25867, receiving "good" quality ratings. For instance, Europa E-RCP offers a guaranteed monthly pension of €218, while Allianz PrivatRente Perspektive, despite being a market leader, has a higher cost impairment and provides a guaranteed monthly pension of €204, rated as "satisfactory." Therefore, to optimize personal-finance for retirement, it's essential to consider the costs associated with different insurance providers and explore various vocational training options in the field of finance or business to manage one's personal-finance and potentially secure a better pension plan in the future.
