Time to Retire? classic private pension insurances are Pricey and Not Always Worth the Investment 💸
Just three pension plans ranked top-notch
Putting away money for retirement is smart. But where's the best place to stash it? You might think private pension insurance is the answer, but reality check, plenty of folks have found out the hard way that it's not always the best choice. Why? You've gotta live a long life to make them profitable, and they're costly.
Classic private pension insurance with a guaranteed interest rate? Seems solid, right? They promise low returns but a fixed interest rate and a lifelong pension. Once you sign up, you're off the hook, letting the insurer handle the investments. But don't be fooled, kiddo!
As of 2025, insurers can only guarantee an annual interest rate of 1 percent, and that's on the contribution after they've deducted their costs. Yup, high costs can eat away at your savings, slashing your potential returns.
Recently, Stiftung Warentest evaluated 14 classic private pension insurance tariffs, ensuring that at least 90% of the paid contributions would be available at the start of the pension. The insurers tested range from Allianz to Europa to Württembergische.
Most Insurance Policies Aren't So Grand
In their model calculation, they looked at the guaranteed pensions offered by providers if a customer paid in 200 euros per month for 30 years (totaling 72,000 euros) and collected the pension at 67. They also evaluated the investment success, the insurer's costs, the contracts' flexibility, and their transparency.
The outcome? Most of the policies received only a "satisfactory" rating, mostly due to high costs. Only three of the plans received a "good" rating: Europa E-RCP (2.2, guaranteed monthly pension 218 euros), Hannoversche Bausteinrente R4 (2.3, 240 euros), and Die Bayerische KlassikRente 25867 (2.4, 220 euros).
Europa takes the cake, with low fees that boost the return. When it comes to Allianz (guaranteed monthly pension 204 euros, "satisfactory), it's the opposite story—shocking fees that cut the yield almost four times more! Hannoversche offers the highest guaranteed pension, but it lags in flexibility and transparency.
If the insurers don't pay out more than the guaranteed pension ultimately, the customers will have to live well over 90 years to receive their total contributions, even with a good plan from the comparison.
Source: ntv.de, awi
Insider Info 🤫- Recent research by Stiftung Warentest on classic private pension insurance shows that only three products earned a "good" rating, but detailed names of these specific insurers were not explicitly disclosed[1].- To find the most accurate list of classic private pension insurance products rated "good" by Stiftung Warentest, consult their official publication or website, where the full test results and insurer names are published[1].- Common insurers tested in related studies include Allianz, Axa, and Ergo, but it's not certain if they were rated "good"[1][2].- To make the most of your pension savings, consider comparing different insurance providers and investing in plans with low fees. Keep in mind that living a long life is crucial to make these policies profitable[1][2].
Vocational training programs and personal-finance management can be essential for securing robust careers and investing wisely in retirement. In the realm of personal-finance, it's crucial to explore various options and compare the returns on investment provided by traditional insurers like Allianz, Axa, and Ergo. Even with vocational training in business or finance, understanding the practices of these insurers, such as hidden costs and fees, will aid in managing your retirement savings effectively.
