Germany's Riester pension reform risks worsening inequality, critics warn
The German government has announced plans to reform the struggling Riester pension scheme. Instead of scrapping the programme, the coalition of CDU/CSU and SPD will adjust its rules. Critics argue the changes may deepen existing problems rather than fix them. Launched in 2001, the Riester pension was designed to boost retirement savings for low- and middle-income earners. At its peak, it attracted millions, but by the end of 2024, only around 15 million contracts remain—far below the original target of over 30 million. Many accounts lie dormant, and payouts stay low due to high fees, returns under 2%, and strict contribution guarantees that limit growth.
The scheme's earlier version favoured lower earners, but uptake remained weak. Now, the revised system will offer percentage-based top-ups tied to contributions. This shift is expected to benefit higher earners more, reversing the original intent.
Florian Blank of the WSI at the Böckler Foundation warns that the reforms could make matters worse. Meanwhile, the coalition shows no hesitation in pushing ahead with the changes. Alongside the Riester adjustments, the cap on tax-deductible retirement savings will also rise. The reforms aim to revive a scheme that has steadily lost participants and failed to deliver meaningful benefits. With the new rules, higher earners stand to gain more, while the original target group—low- and middle-income savers—may see even less value. The government's decision moves forward without signs of reconsideration.
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