Germany's parliament has voted to replace the Riester pension system with a new state-backed savings model. The Riester system has been unpopular due to low returns and complexity. The reform aims to simplify saving, reduce costs, and enhance profitability, especially for low-income earners and families. Finance Minister Lars Klingbeil described the reform as a significant milestone. The new model will phase out Riester contracts, expand eligibility to self-employed workers, and increase state subsidies. Plans for a starter pension for children and young people are also forthcoming.
"Finance Minister Lars Klingbeil called the reform a 'real milestone' and a 'game changer,' stating it strengthens the third pillar of pensions alongside statutory and occupational schemes."
"Changes agreed in parliament make private retirement savings more attractive for low-income earners and families, with saving now paying off 'from the first euro' and reduced costs."
"The SPD-CDU/CSU coalition approved the reform, which will effectively phase out new Riester contracts, while the Left Party voted against and the Greens and far-right AfD abstained."
"Klingbeil also mentioned plans for a 'starter pension,' under which the state would contribute about 10 euros per month into retirement accounts for children and young people."
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