Ouch, Those Classic Pension Insurance Policies Aren't Always a Winner! 😣
Three pension plans are considered "excellent" in terms of their benefits and returns.
Stop and think before diving into private retirement provision. Traditional private pension insurance with a guaranteed interest rate might seem alluring, but the story isn't always rosy. The longevity of the policyholder plays a significant role in actually benefiting from these guaranteed pensions, and high costs can drain your savings.
Want to invest in private pension insurance? Be prepared to wait for the big payoff if you want that guaranteed pension. As of 2025, insurers can only guarantee a maximum annual interest rate of 1%, and they're not obligated to apply this rate to your entire contribution—they can deduct their costs first.
Stiftung Warentest scrutinized 14 tariffs of traditional private pension insurance policies, where at least 90% of the paid contributions are guaranteed to remain at the time of pension withdrawal. From market leader Allianz to Europa to Württembergische, insurers were put to the test.
Many Policies Just "Meh"
In a model calculation, Stiftung Warentest assessed the guaranteed pensions, investment success, costs, flexibility, and transparency of the providers. The result? The majority of the policies tested were merely "satisfactory." High costs were the culprit for the mediocre performance of these policies.
Only three policies rose above the rest, earning a "good" quality rating: Europa E-RCP, Hannoversche Bausteinrente R4, and Die Bayerische KlassikRente 25867. Europa stands out for its low fees, contributing to a higher yield. With competitors like Allianz, costs chip away at your return at a staggering 1.24 percentage points, compared to just 0.32 percentage points for Europa—that's a difference of almost four times! Monthly guaranteed pensions for Europa hover around €218, while Allianz provides only €204. Hannoversche offers the highest guaranteed pension, but it falls short in flexibility and transparency.
If insurers don't cough up more than the guaranteed pension at the end of the day, policyholders can expect to live well into their 90s to recoup their initial contributions through payouts. Even with outstanding policies, the break-even point can be quite late in life. For the Hannoversche Bausteinrente R4, the policyholder would need to crack 90 to surpass their initial contributions.
Sources: ntv.de, awi
Notable mentions go to the Hannoversche Bausteinrente R4 and Europa-Versicherung's E-RCP, with the Hannoversche offering a return of over 11% on the total contributions, making it one of the best-performing policies tested[2]. Despite these successes, keep in mind that even with these policies, the break-even point can be quite steep, with policyholders needing to live well into their 90s to surpass their initial contributions through payouts[2].
Alternatives to traditional pension insurance policies, such as fondsggebundene Rentenversicherungen, might offer better returns and tax advantages for risk-tolerant investors[2]. Do your due diligence and weigh your options before making a decision. Your golden years deserve the best! 👵🏼👴🏼
- To ensure a better return on personal-finance investments, consider alternatives to traditional pension insurance policies, such as vocational training opportunities in a business or finance sector, which could potentially lead to higher earning potential and personal-finance stability in retirement.
- Vocational training in the finance or business sector might be a wise approach for supplementing traditional pension insurance policies, as it could not only secure a more robust personal-finance situation but also provide a community policy of knowledge and skills that can sustain one throughout retirement.
