Die Riester-Förderung – Das unbekannte Wesen (Riester Subsidy – The Unknown Entity)

Abstract

The spread of the state subsidized private pension scheme (Riester pension), taken as a whole, still continues very dynamically. Ten years after the introduction of the Riester pension, however, its distribution among certain groups of the population remains fairly low. One reason seems to be that a large part has no knowledge of their eligibility for the subsidy. Therefore, among these people, the subsidy cannot serve its purpose to positively influence the decision in favor of the Riester pension. The lack of knowledge about the eligibility status is most pronounced among the lower income groups, where the Riester pension is least common. Besides, many of those who actually have a Riester contract are not aware of the size of the received subsidies. This reduces the acceptance of the Riester pension and promotes the termination of Riester pensions. The misjudgment of the size of assistance provided might be due to the complex structure of the subsidy. Before thinking about modifying the amount of the subsidy or introducing a compulsory form of private old-age provision, the spreading of information about the eligibility status should be intensified as well as a further simplification of the subsidy mechanism should be taken into consideration.

Keywords: subsidized saving contracts, old-age provision, information, financial literacy, diffusion of financial innovations, Riester contracts

JEL Classification: G28, H2, J26