BERLIN (dpa-AFX) - Walter Riester, the former SPD Labor Minister and namesake of the Riester pension, has criticized the new retirement savings plan introduced by the "grand coalition" government. Speaking to the "Frankfurter Allgemeine Sonntagszeitung", he argued that the coalition should have made contributions mandatory.
"Obligatory private pension provision would lower distribution costs," said the 82-year-old, who has been retired from politics for years. He added that saving for old age often competes with immediate consumption needs and financial obligations. However, without private savings, some individuals face the risk of poverty in old age, as the statutory pension will not be sufficient. Similar criticisms have been voiced by the Green Party, which proposed a state-run pension fund into which all citizens would automatically pay unless they actively opt out.
As Labor Minister in 2001/2002, Riester developed the system of state-subsidized private pension provision that now bears his name. In the interview, he also criticized the decision to abandon a mandatory capital guarantee. He warned that savers should not lose any money during the accumulation phase. Under the current Riester pension rules, 100 percent of the contributions paid in must be guaranteed for payout. This requirement is often cited as a reason for the low returns seen on many contracts./tam/DP/stw
