Riester Savings Contracts Face a Win for Consumers
Embrace the news that millions of Riester contract holders can potentially see a bigger payout thanks to the recent ruling from the German Federal Court of Justice (BGH). This judgment, handed down on Tuesday, found an agreement used by savings banks to be invalid. The clause involved customers having to cover acquisition and/or brokerage costs in the event of an agreement for a life annuity taken after the savings phase (case reference: XI ZR 290/22).
According to the BGH, this stipulation was not transparent enough and thus infringed upon consumers' transparency requirements. The BGH's presiding judge, Jürgen Ellenberger, emphasized during the hearing that customers should be able to recognize the costs they would face before signing the contract.
Riester Contracts: Two Phases
Riester pension contracts encompass an accumulation phase and a payout phase. Savers have the option of opting for a monthly pension for life, also known as a life annuity, or having a portion of their money paid out immediately.
The case at the heart of this ruling concerns Riester bank savings plans taken out with Sparkasse Günzburg-Krumbach in Bavaria. The Baden-Württemberg consumer advice center took action against the bank and other savings banks with such clauses labeled "Vorsorge Plus". Despite numerous customers seeking assistance from the consumer advice center since 2019, only the Bavarian case reached the Federal Court of Justice.
According to Niels Nauhauser, Head of the Pension Provision, Banks, and Loans department at the consumer advice center, savings banks are no longer allowed to charge such fees as ruled in Karlsruhe.
Riester Pension Polarizing Views
The German Federation of Consumer Organizations (vzbv) criticized the costs provision-holders incurred at the start of payout back in April. Despite the Riester pension's introduction in 2002, it has been facing frequent criticism, including issues related to high fees and long periods of low interest, reduced returns, and dormant contracts.
Though this ruling is a step forward for consumers, it is essential to remember that there are still various retirement provision alternatives available, such as state pension schemes or private retirement savings plans.
The Larger Impact of BGH's Ruling
Experts predict that up to 800,000 Riester contract holders may benefit from this ruling. Providers including savings banks, Volksbanken, and Raiffeisenbanken are also impacted by this ruling. While some contracts such as those of Volksbanken and Raiffeisenbanken do not include acquisition fees, administrative costs before payout are still applicable.
Consumer centers, as advocates for consumers’ rights, play an essential role in educating and protecting consumers in pension matters. They help ensure that consumers fully understand the terms and conditions of their pension contracts.
By venturing beyond the confines of the provided search results, we can find more detailed information on the implications of this ruling for consumers and providers in Germany.
