Private and Tax Saving
Germans in the past have been enamored with so-called “Kapital-Lebensversicherung”, a whole-of-life insurance plan. Even today many do not understand that they have bought into a highly expensive and intransparent form of investment that offers very little actual yield to them. This is one of the reasons why Germans, who are among the biggest savers within the OECD, are the people in the western world with the lowest yields on their savings.
Therefore, talking to your German neighbors or friends about finances will usually not offer you good insights into how you can invest profitably for your future or retirement.
There is little positive to be said about private pension plans in Germany outside of the tax-subsidized ones like Riester, Rürup, or company pension schemes (bAV). They are usually very expensive, heavily loaded with upfront commissions and in general best avoided. To be perfectly honest with you: we see no real reason why you should invest into a typical German private pension plan per se.
You are usually better off investing directly into savings plans without an expensive insurance umbrella, for instance based on direct savings into passive investment funds like ETFs.
Or, if you would like to set up a pension plan while working globally mobile, a really good, fairly priced and transparently managed offshore pension plan can be a solution.
We at CR&Cie. offer such offshore pension plans with transparent fee structures only and commission-free. You’ll pay a reasonable fee for our advice and services and avoid all those pesky high signing commissions and kick-back commissions and whatnot. If you plan on a more globally mobile life for the years to come, such an offshore pension plan can be a good pension-planning tool for you… but please make sure you have seen our warning about the many bad offshore plans out there on the market!