Is a retirement account with managed funds worth having?

Investing
#1

I live in Germany and my employer offers a retirement account(Altersvorsorge) via an insurance company. Pros are that my employer offers a % match - not sure exactly how much but it’s for sure less than 50% - and that I do not pay any taxes on the money I send to that account.

After learning lots of useful stuff in this course, I checked the conditions of the account. There is a front load (Ausgabeaufschlag regulär) of 0,5% and an expense ratio of 1,94%. I understand that these are high fees. Is there any way to calculate if the profit due to the company’s match & the gain in taxes makes this account worth having?

I hope my question is clear!

Best Regards

#2

Hi @AZin! I unfortunately don’t know anything about employer retirement plans in Germany. Like you mentioned, those fees are very high relative I usually see in the U.S. and Canada. However, even with those high fees, contributing up to the employer match likely still makes sense. You could run some scenarios in Excel / Google Sheets to get more comfortable with if it makes sense for you to do. The first thing I would do is verify what the employer match is and if there is a vesting period (e.g., you have to work at the company for X years before you can keep the match).

1 Like
#3

@ShaneSideris Thanks a lot for your answer :slight_smile:

2 Likes