The eighth part of the series deals with Riester subsidy calculators, which all too often provide incorrect or inadequate results on the state Riester subsidy.
The Riester subsidy consists of an allowance subsidy and a (supplementary) income tax subsidy, which is determined by the tax office as part of the so-called “Riester favourability test”. The calculations for the two subsidies differ and require different basic data.
This is especially noticeable for married couples. For the calculation of the minimum own contribution and thus the supplementary allowance, the income subject to GRV (or equivalent) of only the person directly liable for support is decisive – in addition to other entries such as child benefit entitlements or age. All income subject to income tax is important for the calculation of the tax allowance – including that of the spouse.
Even with constant income data, there may be changes in allowance amounts over time. For example, allowances for children or for new entrants to the labour market may be omitted. As a rule, allowances that are no longer paid are compensated for by increased tax incentives. If the necessary basic data cannot be entered in a Riester subsidy calculator, there is a risk of incorrect results. This is to be demonstrated on an internet calculator of a major life insurer (see figure). What is pleasing about the example is that even those who are indirectly eligible can work out their subsidies. Unfortunately, however, none of the results are correct.
Those eligible for indirect funding must make a contribution of zero euros – instead of 60 euros. The amount of the allowances granted depends on the own contribution of the person directly eligible. But this cannot be calculated at all (due to the lack of requested basic data). The granting of the child allowance for all eternity (“from 2010”) is certainly incorrect and the query about the bonus for new entrants to the labour market is flawed. Among other things, necessary input options for provisions that could reduce the Riester subsidy and for the income of the spouse are missing. The stated allowances and tax benefits may therefore have nothing to do with reality.
High error potential
The same heights of the illustrative bars with different savings performance raise additional questions. For directly eligible ones, the potential for error increases still further. Thus, impossible input combinations are accepted without comment (income tax class II and 0 children at the same time). Just the unnecessary question about the income tax bracket is exposing. In this case, the calculation is also carried out without the possibility of entering partner data or child assignments. The calculation of the Riester subsidies leads at best by chance to approximately correct results. The almost useless Riester subsidy calculator given in the example is offered by the life insurer for self-advice on the Internet. How should a single-company representative of the same insurer behave when a client comes in for a consultation with these “results”? Should he make his recommendation on this basis – and justify it? Is he supposed to point out the incompetence of the head office, which failed to detect the errors in the purchased software?
What if the software bugs should even be known there? Brokers can distance themselves more easily – from the “result” as well as from the insurer. Conclusion: Riester subsidy calculators of this kind are certainly not a contribution to overcoming the crisis of confidence that customers have in financial service providers. The damage potential is thus higher than it appears at first glance.
by Dr. Wolfgang Drols and Dr. Johannes Fiala
by courtesy of
www.versicherungsmagazin.de (published in Versicherungsmagazin 04.2009, page 54)
