The eleventh part of the series deals both with easily recognizable software errors in Riester subsidy calculators and with omitted information.
Taking out a retirement plan is an investment.
As with any other investment, the state subsidies in the investment phase are the focus of the customer’s interest when concluding a Riester contract – for the entire investment period and in full. As self-evident as the customer’s wish for comprehensive information is, only a few Riester subsidy calculators fulfil this wish.
All too often, the Riester tax subsidies are misappropriated. The information of the calculator is just limited to the forecast of the allowances – and these are then also often wrong. The Riester subsidy calculator shown below is limited to details of the subsidy and the personal contribution required for this – in this case an annual allowance of 339 euros.
There is no indication that the child allowance taken into account will be discontinued at some point and that the required personal contribution will have to increase. Rather, an inaccurate allowance constancy is feigned. There is also no reference to a possible new entrant bonus. The necessary input options are simply missing for a calculation of such a claim.
Only three entries are possible, namely the number of children born up to 31 December 2007, the number of children born after that date and, as the third entry, the gross annual income. An input option for marital status is completely missing. For married couples, it remains unclear what should be entered as gross annual income.
Is it just the income from the prospect or the couple?
Is it the pensionable part?
The only statement in the “Income” column is the cryptic phrase “four percent of your gross income as of 2008 (maximum 2,100 euros)”. But what does this one say?
And why is the reference “from 2008” necessary in 2009?
What number of children must be entered?
Everyone who lives in the family? Just the biological children?
Unfortunately, all help texts are missing for entries – if you disregard the cryptic sentence quoted above.
The inadequacy of the calculator is shown by an example:
For a single person (born on 2 December 1970) with a constant income subject to pension insurance of 30,000 euros and one child (born on 1 January 1991 and receiving 18 years of child benefit), the calculation from the screenshot fits. Gross premiums for the term of 29 years amount to 34,800 euros.
The screenshot shows that 9,831 euros in allowances are contributed by the state, which means that compared to his current income, his cumulative future net income is reduced by 27,869 euros. In reality, however, there are only 4,466 euros in allowances – but in addition there are about 7,000 euros in Riester tax incentives, about 14,000 euros in future savings from the AltEinkG and well over another 5,000 euros from the economic stimulus packages I + II.
In total, the state provides investment funds amounting to more than 30,000 euros, which the interested party can use for his old-age provision without having to restrict his current standard of living. Only the remaining approximately 4,500 euros reduce his current standard of living – by just under 13 euros per month. Overall, this Riester subsidy calculator is an example of a doltish information service. The important information is missing and the displayed calculation results are incorrect. The appropriate penalty for this is disregard by interested parties. Hopefully the click rate will take care of it.
by Dr. Wolfgang Drols and Dr. Johannes Fiala
by courtesy of
www.all4finance.de (published in Versicherungsmagazin 08/2009, 53)
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Dr. Johannes FialaPhD, MBA, MM
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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