New Germany Fund: Retirement provision without high costs!

New Germany Fund: Retirement provision without high costs!

Today is June 26, 2025, and the topic of retirement planning is very popular. The state government of Hesse has decided to support reforms to promote private pension provision that specifically take savers' concerns about excessive costs and guaranteed returns seriously. A recent report by Hessen.de highlights that high guarantee requirements often lead to investors foregoing attractive profit opportunities, particularly in global equity investments. Interestingly, it turns out that the risk of equity investments is manageable for long-term investments.

A central concern of these reforms is the creation of the Germany Fund, a new, privately managed product that is under public supervision. This is intended to serve as a standard offering and create a benchmark for other competing products. The aim is to protect savers from overpriced products, which have often been criticized in the past. Savers have not only expressed concerns about the original form of retirement provision, but also difficulty making decisions. Many people put off the topic of retirement planning, which represents a major risk, as described by the experts at Hessen.de.

The supply gap: a serious problem

The reality for many employees is that the statutory pension often only covers between 55 and 70 percent of the net salary. This means that there is a significant supply gap here. According to Deutsche Bank, at least 30 percent of your income must be invested in retirement provision in addition to the statutory pension in order to be able to maintain your usual standard of living in old age. This makes it all the more important to build up reserves regularly and early on. Even smaller amounts are helpful if they are saved consistently.

Risks and opportunities of private pension provision

As Stiftung Warentest shows, private retirement provision plays a major role in Germany, especially life insurance, which is often offered by large providers such as Allianz or Debeka. However, in recent years, low interest rates have made these offers less attractive. Life insurers are faced with the challenge of offering classic products that continue to be attractive.
Unit-linked pension insurance, although they offer less security, could be a solution as they promise better return opportunities. However, it should be noted that such products often involve higher costs, which can reduce the investment success.

Experts also recommend investing in an ETF savings plan rather than in less transparent mixed products. Careful preparation and understanding your own needs can be crucial. The taxability of returns is another advantage that should not be underestimated.

In conclusion, it can be said that the reforms to private pension provision in Hesse can be viewed as a step in the right direction. They offer savers an opportunity to better protect themselves and invest specifically in their future. Because the biggest risk is not starting on time.