The federal government wants to reorganize private pension provision in 2026 – the centerpiece is a state-funded retirement provision depository. From 2027, ETF savings plans for retirement will also be possible. On Friday, the pension reform law was discussed in its first reading in the Bundestag. The reform is considered one of the largest renovations since the introduction of the Riesterpension.

FOCUS online spoke to consumer advocate Niels Nauhauser about what he believes savers will now face.

FOCUS online: Mr. Nauhauser, why do you think the draft law for a new pension provision continues the mistakes of the past?

Nauhauser: Retirement provision is a matter of trust. The market is complex and it is now getting even more complicated with hundreds of new standard products and three levels of guarantees. Most people will need advice. But you won’t get that, just sales conversations that are poisoned by a false incentive because of commissions. The best products for individual needs are not sold.

They accuse the Ministry of Finance of implementing an agenda of the financial lobby. How exactly do you determine this?

Nauhauser: The financial lobby has been calling for a simplification of funding, an increase in deposit limits and an abolition of the guarantee requirement for years. This is exactly what is being implemented now. However, the introduction of a standard product based on the Swedish model, which consumer associations, civil society, many scientists and even members of the Advisory Council have called for, will not be implemented.

By eliminating the guarantees, the new retirement savings account should enable higher returns. For whom is this model worthwhile and for whom is it risky?

Nauhauser: Young people have long been making provisions for their old age with ETF savings plans. They will certainly check whether they can implement such a strategy in the new Riester mantle. However, it remains to be seen how high the costs will be and what the terms and conditions of the contracts will be. Consumers who do not know their way around depend on advice. However, there is no broad advice that focuses on your interests.

The draft provides for a cost cap of 1.5 percent. Isn’t that enough to prevent excessive fees?

Nauhauser: No. The limitation of the effective costs to 1.5 percent per year is only limited to the provider’s respective standard depot and corresponds to the cost rate previously customary in the industry. Such costs are devastating in the long term, as a comparison with the Swedish solution shows. While with this model almost all of the capital market income remains with the savers, with 1.5 percent costs around 47 percent of the income is lost in the long term. If the fees continue to rise, the future pension will shrink by around half in total – the costs can therefore eat up a significant part of the return.

There should be state funding of up to 420 euros per year plus child allowances. Who benefits from this?

Nauhauser: Government funding does not reach those who most urgently need retirement provision because they have no money to invest. On average, half of the people have assets of around 6,000 euros. The largest item is your own car, and then you also have debts of 2,500 euros. How are these people supposed to take advantage of the funding if they can’t save anything themselves?

Are you therefore convinced that this reform of private pension provision will also fail?

Nauhauser: Yes. The federal government is not solving the structural problem: when it comes to retirement provision, only what brings in commission is sold. Nothing changes about that. There are already many different offers on the market today. However, it is primarily the offers with the highest commissions that are sold. In addition, the government is leaving the market to providers who have repeatedly proven in recent years that they always interpret their contracts and terms and conditions to their own advantage in order to maximize their profits, even if their behavior is then proven to be illegal years later.

Unlike Riester There is no longer a lifelong pension, but rather a payment plan up to at least 85 years. What happens when someone gets older?

Nauhauser: A lifelong pension will still be possible. The new payout plan option is one of the few improvements. It enables higher payouts than an annuity from the insurance industry, which often only pays off when you are over 95 years old.

Nauhauser: Such a fear is justified. Our experience teaches one thing: savings banks paid less interest, insurers paid less pension and all providers paid significantly lower returns than they promised. Fund companies also disappointed their customers by selling stock funds during the crash. So the small print will also be important here.

What exactly should consumers do now – especially those with existing Riester contracts? Wait or switch to the new model later?

Nauhauser: At the moment we can only wait and see as there are no offers on the market yet. But as soon as they exist, the providers will send out their salespeople and make new offers attractive to their customers on a large scale. In any case, one piece of advice is to examine these offers critically and obtain other independent information.

What exactly would have to be changed now so that you would say: This reform has a real chance?