What are the pros and cons of running several pension ensurances beside each other, instead of putting all the money into one ensurance?

Model all in one:

Contract A 2016 -> 100€/month
Contract A 2020 -> 200€/month
Contract A 2025 -> 300€/month

Model multiple contracts:

Contract A 2016 -> 100€/month

Contract A 2020 -> 100€/month
Contract B 2020 -> 100€/month

Contract A 2025 -> 100€/month
Contract B 2025 -> 100€/month
Contract C 2025 -> 100€/month

1 Answer 1


Context for non-german readers: In Germany there's consumer protection law for pension insurances that gives you a guaranteed minimum interest rate which is the same for all insurance companies and is changed every year but you get the guaranteed minimum interest from the year where you signed your contract. Side note: The minimum guaranteed interest rate on pension insurance will go down on January 1st, 2017, so better get a contract this year than next year, no matter whether you do one model or the other.

Assuming that you can even find a contract for your all-in-one-model, you're essentially betting that the guaranteed minimum interest rate will not go up in the next 10 years, because if it gos up, you'll be better of getting a new contract for the money you start to contribute in 5 and 10 years. Also, the all-in-one-model is putting all your eggs in one basket.

On the other hand, if you think the guaranteed minimum interest rate will stay low or even go down, then you could secure today's minimum guaranteed interest for all your contributions and also save fees by signing a contract for such an all-in-one-model now.

Of course, if your insurance company is doing well and has a good investment manager, then you'll never hit the minimum guaranteed interest rate and will always stay above it, in which case the multi-contract-model still has the advantage of not putting all your eggs in one basket (one company's investment manager) and the all-in-one model has the advantage of saving fees.

Also, whether a regular pension insurance contract is the right thing for you or whether you should use any of the other options (Betriebsrente, Riester) available in Germany depends on a whole lot of considerations about your personal situation and your plans for the future, so you might want to ask a professional.

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