For years German consumer organizations have criticized the state-sponsored retirement provision, the Riesterrente. They point to unfair retail practices, insufficient disclosure of costs, inadequate consumer service and incomprehensible consumer information. The German Federal Government, however, takes a positive view on the Riesterrente.
Kornelia Hagen, who is an expert at the German Institute for Economic Research (DIW), and Prof. Dr. Lucia Reisch from the Copenhagen Business School investigate whether the criticism of consumer organizations is justified. They conclude that there is evidence that the costs of the Riesterrente are in some cases too high and that conditions are unclear. Furthermore, the intended target group - low and middle income households - is often not reached. They also highlight that until now no systematic monitoring of consumer experience and complaints has been installed.
Kornelia Hagen argues that “given the fact that the government introduced the Riesterrente as a major pillar for retirement saving, the evidence base is insufficient.” The authors call for consumer complaints to be systematically recorded and for an evaluation of the market for state-sponsored retirement provision from a consumer perspective.