– Why Riester savers save for creditors, insolvency administration and social security funds in case of doubt –
“We saw a light at the end of the tunnel. It was the oncoming intercity.”
Financial houses, i.e. banks and insurance companies, and their lobbying associations claim in their advertising and in the training documents for their advisers and agents that the assets saved in Riester contracts cannot be seized. The opposite is true, as evidenced by a ruling of the Munich District Court dated 12.12.2011 (Case No. 273 C 8790/11).
Almost every Riester contract contains payments that are not subsidised
All assets in Riester contracts, insofar as they are based on contributions which have not (yet) been subsidised, can be seized by a creditor or insolvency administrator at any time and paid out to him. The AG Munich concludes this from the clear wording of § 97 EStG, which clearly does not speak of eligible but only of subsidised contributions.
As the Munich Regional Court points out, the unsubsidised contributions are not only those contributions which were contractually agreed from the outset as ineligible overpayments, but also all contributions for which a subsidy had not actually been granted at the time of the attachment. This does not only affect the frequent cases of a decrease in income, where the Riester contract is not reduced and thus part of the contributions can no longer be subsidised.
Each Riester prospective customer can look at the different on-line computers of the offerers in the Internet and will determine that so well as no Riester computer is likely to supply identical results – thus each customer places itself the question, which financial house can calculate then now correctly, and thus also correctly about the allowances inform and advise.
Eligibility of contributions does not prevent Riester contributions from being seized
Because the wording of the statutory provisions only refers to the contributions that have actually been subsidised, but not to the contributions that are “eligible” in principle and the assets built up from them, the entire Riester capital saved from contributions for which no subsidy has yet been paid can be seized. It does not matter whether the support is definitively no longer possible because, for example, application deadlines have been missed.
Rather, the seizure also takes place insofar as application deadlines have not yet expired and support would therefore still be possible in principle. This also applies, for example, if contributions have been paid in during the year but the subsidy has not yet been claimed but can only be claimed after the end of the year. And even if the grant has already been applied for, but a decision has not yet been made on the grant application or the grant has not yet been paid out, an attachment is possible. It is therefore almost certain that every Riester contract will have something to be seized by creditors and insolvency administrators.
No seizure protection in an unlimited amount by distribution over several contracts No Riester saver can distribute his assets in an unlimited amount over any number of Riester contracts and, in the case of each individual contract, if he is discovered, still prevent seizure in each case by referring to the statutory possibility of promotion. The legislator has prevented such abuse by protecting only the contributions actually subsidised and the Riester capital saved from them.
If the insolvency administrator works fast enough, he often gets back the entire Riester assets from overpaid contributions even for years of subsidisation, plus the contributions of the years for which subsidisation has not yet been applied for or paid out, and the contributions of the current year for which no subsidisation application could be made at all.
However, the Riester saver can terminate the Riester contract in full or in part in good time – insofar as he has not received any subsidy for it, he does not then have to repay any such subsidy, of course.
With regard to the remainder, the creditor will have to wait and see whether the policyholder will terminate the contract at some point or whether the usual 1/3 partial capital will be paid out at the start of the pension. However, he can seize the Riester pension at the latest, if necessary (if the total income is high enough) also completely. This is because what previously escaped attachment can be attached as a pension if, together with all other income, the unattachable amounts – at social assistance level – are exceeded.
In practice, Riester contracts are in principle attachable – despite other advertising by the insurers
It is of central political importance that the pension level of the statutory old-age pension is reduced from 54% to around 43% of the last net income. However, insofar as Riester assets can be seized, it is not even possible to partially compensate for the pension gap.
This is due on the one hand to the legal regulation and on the other hand to the fact that such contracts would have to be “maintained and readjusted” year after year in order to keep unsubsidised amounts to an unavoidable minimum – no intermediary or adviser will want to take the time for this. It is also questionable whether the majority of advisors and intermediaries even have correctly calculating software available for this purpose.
Way out in Germany: Voluntary payments into the pay-as-you-go system
If you want to be 100% sure that you are fully protected against seizure during the payment phase, it is best to find out about the options for paying voluntary contributions to the German Pension Insurance Association (DRV). There is also the option of finding further possibilities of obtaining insolvency protection abroad. Both approaches promise at least a higher degree of security and possibly even better profitability than in a pension contract.
It would be a mistake to believe that funded pensions are more secure and profitable than pay-as-you-go pensions. The problem here is not the alleged demographic change, but simply the fact that pensioners and employees have not participated adequately in the upswing or productivity increases since around the year 2000.
Around a quarter of the workforce is employed in the low-wage sector, which also led to lower contribution income.
The decoupling of workers and pensioners from productivity growth is simply a question of the increasingly unequal distribution, as the so-called poverty report reveals as a development every year. In this case, Riester was a means of ensuring that the restructuring of the social security system could proceed politically undisturbed by making those affected believe that there was a light at the end of the tunnel.
by Dr. Johannes Fiala, Dipl.-Math. Peter A. Schramm
by courtesy of
The Komet trade journal for showmen and market traders (issue 5476)
www.pt-magazin.de (published in PT Magazine, 04.2012 under the headline: Not a safe bank)
www.drw-verlag.de (published in ” B+H Bauen + Holz”, a supplement to the Holz-Zentralblatt, of 12.09.2014 under the headline: Riester contracts are attachable)
www.submission.de (Submissions Gazette No. 173under the headline: Riester contracts are usually attachable)
published in www.fondsprofessionell.de (09/03/2014 under the headline: Riester contracts are usually attachable after all)
www.haufe.de (published at Haufe.de/Immobilien (04.09.2014 under the headline: Riester contracts are usually attachable
www.experten.de (published on 24.09.2014, expert platform under the headline: Riester contracts are attachable)
http://www.stbverband-berlin-bb.de (Association news 3/2012 under the headline: Riester contracts are usually distrainable – contrary to usual advertising of financial houses)
www.neopress.de (published under the headline: Riester contracts are usually attachable – contrary to usual advertising by financial houses)
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About the author
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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