Understanding and comparing Riester pension products

Investments and pension plans Understanding and comparing Riester pension products

Riester products for private provision for old age are subsidised by the state. However, there are a lot of very different products, and often it is hard to compare them. In order to make it easier to compare the many pension plans on offer, standards for product information were introduced in 2017. As a further step, wirksam regieren is working with citizens to test whether these standards are comprehensible and drawing up proposals to make it easier to compare the different products on offer.

Comparing Riester Products

Comparing and Understanding Riester Products

Photo: Getty Images/Martin Prescott

Making it easier to compare pension products

The third pillar in stable provision for old age, alongside statutory and company pensions, is private provision. Private pension plans that meet certain conditions, such as the Riester pension, are subsidised by the state. About 16 million Riester pensions have been taken out in Germany to date, with some 11 million citizens taking advantage of the state subsidies, and new ones are still being taken out.

The term “Riester pension” covers a wide range of very different products: these include insurance policies, savings plans, unit trust agreements and home loan and savings contracts, all with their own parameters and, depending on the provider, different conditions.

To make it easier to compare the various state-subsidised pension products, standardised information leaflets have been produced since 2017. These leaflets give a two-page summary of the key information about a specific pension product.

Different designs lead to different levels of visibility

Findings from perception psychology show that how important someone finds information largely depends on when they perceived it. In order for a warning to be effective, it should ideally be perceived as soon as possible, that is, before someone has decided to buy a product, for example.

In order to improve protection for investors, wirksam regieren conducted a study on behalf of the Federal Ministry for Finance in which it investigated which measures can be carried out to ensure that investors perceive the warning on investments at an early stage. First of all, four citizen focus groups developed various design options for warnings that are clearly visible and easy to understand. The impact of these designs was then reviewed in a representative online study.

Citizens evaluate how easy it is to understand various types of information about pension products

In order to make it easier to choose a suitable state-subsidised pension product, information leaflets should make it easy to find important information about the product and explain technical terms. The information in the leaflet should make it clear what citizens need to know and should present the information in a clear and comprehensible way.

The first step is to understand how people think about provision for old age, and what criteria they use to decide on a particular pension product. How important is the product leaflet for citizens choosing a state-subsidised pension product? Does their view of how easy the information is to understand depend on how much prior knowledge they have about the subject?

Citizens were interviewed in groups and individually about their decision-making process when it comes to choosing pension products; tests were done to see how easy the information leaflets are to understand; and the information that citizens find most important when deciding on a pension product was identified.

The results of these interviews and tests will feed into a second project phase in which alternative ways to present the information leaflet are tested empirically with citizens.


on behalf of the Federal Ministry of Finance (BMF)