Changing providers of the German state supported contributory pension scheme (
Riester-Rente) is a major decision that needs to be thought through carefully. The reason for doing would be to reduce the amount of the payments. Of course every member of the Riester scheme is entitled to “skip” a payment when money is tight. When this happens the state will also withhold it’s contributory payment as one might expect but the accumulated capital is untouched. The saver can then continue making payments and the state will renew its commitment to pay it’s share.
Employees paying into the
Riester-Rente who become self employed do lose their entitlement to state contributions. However, people in this position are not obliged to cancel their pensions. They can still pay their contributions independently. If the circumstances of the payee change and he regains his entitlement to state support then this is not a problem at all.
Customers of the German contributory pension scheme must give three months notice (until the end of the quarter) if they wish to switch their Riester-Rente providers. Anybody moving over to another provider needs to have already formally “closed” the previous contract before commencing with the new. In principle, every saver has the right to change their provider.
However changing over from one Riesterproduct to another does incur costs. If the customer only changes the insurance element of the contract these costs are usually kept to minimum. The cost for the customer of an entirely new contract consists of commissions between 50 and 100 Euro. For special saving plans (Banksparpläne) these fees are sometimes waived. Finally costs are incurred when insurance is arranged for the new plan. This is reduced by switching within the first five years.
It is crucially important to obtain sound independent advice, unabhängige Beratung, before committing oneself to a change of provider in order to secure a viable income upon retirement.
