Check what you already have

Marie von Ebner-Eschenbach, one of the finest Austrian writers of the nineteenth century, published a slim collection of aphorisms in 1880. Near the very start of the 1893 edition of her collected works sits a six-word line: “Wer nichts weiß, muß alles glauben.” In English, roughly: whoever knows nothing has to believe everything. She wasn’t writing about money, yet the line rarely fits as neatly as it does with retirement planning.

What usually goes missing is something quite modest: a clear picture of what you have already built up. Without it, you are left with rules of thumb, a brother-in-law’s experience, or a single figure half-remembered from an article. Much of the picture is already in the post, though. From your 27th birthday, once you have five years of contributions on record, Deutsche Rentenversicherung sends you an annual pension statement, the Renteninformation. It shows the rights you have earned so far, a projection of your state pension at retirement age, and what you would receive if you became fully unable to work. Two things are worth knowing when you read it: every amount is gross, and the projection ignores inflation.

For the rest there is the Digitale Rentenübersicht, run by Deutsche Rentenversicherung Bund. It brings state, workplace and private pension rights together in one place, it is voluntary and free, and you sign in with the online function of your ID card and your tax ID. It is only as complete as the providers connected to it; professional pension schemes (Versorgungswerke) and civil-service pensions, for example, aren’t obliged to take part. In the CapitalPath approach, Understand is the first step, and it often starts with the paperwork already sitting in a drawer at home.

Katrin is 44 and works as a speech therapist in a local practice. At her brother’s fiftieth, the talk eventually turns to pensions. Her brother-in-law insists the state pension is a lost cause for anyone her age, a friend swears by her fund savings plan, and a neighbour says the smartest move is to sign nothing at all. Katrin agrees with each of them in turn and drives home with the uneasy feeling that any of them might be right.

The next morning she digs out the folder marked “Insurance”. Tucked at the back are her pension statements from the last few years, two of them still in their envelopes. She reads the latest one properly, including the paragraph about health and long-term care contributions, and realises the figure bears no relation to anything she heard the night before. That evening she signs in to the Digitale Rentenübersicht with her ID card and requests information from every provider.

A few days later a line appears that she had almost forgotten: a workplace policy from her first job, a Direktversicherung, which has carried on without contributions since she changed employers twelve years ago. The following morning she phones the insurer and asks them to walk her through what the policy is worth now and how it works. Any thought of a new policy can wait until she knows what she already has.