Program Riester-Rente Is a voluntary supplementary pension insurance with state participation.
IMPORTANT. Added on Dec 14, 2021:
🢢 Riester-Rente remains and will be in 2022 and beyond
🟢 The guaranteed rate is reduced from 0,9% to 0,25%. As a result, many companies cease to conclude Riester contracts.
🟢 If you are interested in Riester, please contact us and we will help you in 2021 or already in 2022, but with a lower guaranteed rate.
🟢 Our recommendation: tariffs with investment in funds, because 0,25% is very little, even taking into account state subsidies.
✔️ The state annually pays an additional 175 € per adult and 300 € per child (born after January 1.01.2008, 185) or 2008 € per child (born before XNUMX) according to the program Riester-Rente.
✔️ Upon retirement, you will be able to receive 30% of your savings on a one-time basis.
This stimulates the population to actively participate in the formation of their future pension.
When participating in the program Riester-Rente, a family of 4 people (2 adults + 2 children) receives 950 € of subsidies annually for a future pension or for the purchase of their own home.
How to find out the amount of your future pension, we considered in separate post.
✔️ Savings accumulated during the program period Riester-Rente, can be spent not only on a future pension, but also on the purchase of real estate and on repaying a mortgage loan.
An important condition: the property should only be used for its own residence.
Let's look at two examples of calculating contributions and subsidies for Riester-Rente depending on income and situation:
Situation: Family, two children born in 2010 and 2014. One spouse earns 50'000 € per year. The second spouse takes care of children, home.
Option 1: agreement Riester-Rente is issued for a non-working spouse and children are added to it.
Your contribution: 60 €
Subsidies: Adult 175 € + 2 x 300 € children = 775 €
Total savings for the year: 835 € of which your contribution is only 60 €. Income as a percentage – 1'391%
Option 2: agreement Riester-Rente is issued for a working spouse and children are added to it.
Own contribution: 4% of income, which is 2'000 €
Subsidies: Adult 175 € + 2 x 300 € children = 775 €
The total contribution is limited to 2'100 €
Total savings for the year: 2'000 € of which your contribution is 1'225 € (2'000 € - 775 €). Percentage income of 63%, which is also not bad at current rates.
When concluding an insurance program, pay attention to the following points:
Commission when concluding a policy;
Annual maintenance cost;
Fee for using savings Riester-Rente for real estate financing. Most often, this purpose of using the program is not financially profitable;
The size of the commission for the enrollment of government grants.
Also pay attention to the presence in the policy Riester-Rente the following point:
rentengarantiezeit – the ability for a spouse or children to inherit pension payments. Usually for up to 10 years. There are cases when the conclusion Riester-Rente not profitable, read about it in next post.
Need help choosing insurance? Write us and we will answer your questions in detail.
Our recommendations and conclusions:
- The program will be especially beneficial for families with children and when one spouse has little or no income.
- As a consequence of point 1, concluding a contract for both adults, especially if one or both work, is not the best solution. Avoid this.
- The main benefits are received by the insured in the presence of children in the family.
- You can increase your income by concluding a program with investing in funds. Our ETF recommendation.
Briefly about what it is Riester-Rentewho it will suit and not suit in our video clip:
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