नजदीकी फायदा देखने से पहले, दूर का नुकसान सोचना चाहिए

The line above belongs to Subhash Nagre, known as “Sarkar” and played by Amitabh Bachchan, in Ram Gopal Varma’s 2005 Hindi film Sarkar, and it is one of the film’s most widely quoted dialogues. The film is a political crime drama set in Mumbai, about power, family and loyalty, and the scene has nothing to do with money.

Even so, it fits a choice many people face when they start saving for the long haul: a pension contract with a premium private pension provider, or doing it yourself with an ETF savings plan in your own depot. The near gain sits with the depot. It is cheaper in the early years, with no set-up costs and usually lower running costs. With a premium provider you pay more at the start, and in return you get more security through fixed rules for the build-up phase, usually the option of an income for life, and a tax advantage that only shows after many years.

The distant loss in the depot is tax. If you rebalance or switch funds a few times over 30 years, you sell units and realise gains, and each time Germany’s flat-rate tax on investment income plus the solidarity surcharge falls due. Whatever goes to the tax office stops growing with the rest. Inside a unit-linked pension policy, fund switches during the build-up trigger no tax at all. Tax is charged when the money is paid out, and if you take a lump sum after your 62nd birthday and at least twelve years in the contract, usually only half of the gain is taxed at your personal rate.

The chart below works this through for €500 a month over 35 years. The depot stays ahead until around year 20, because the contract costs more. After the second switch the contract pulls ahead, and after 35 years it stands at about €1.44m against about €1.32m, before tax at payout. Once that tax is roughly allowed for, the gap comes down to around €32,000, and with different costs, returns or tax rates it could be smaller or go the other way. It also only works if the contract runs its full course. According to the Verbraucherzentrale, Germany’s consumer advice service, cancelling early gets you just the surrender value, from which acquisition and sales costs and a cancellation charge can be deducted. That is why the CapitalPath approach starts with understanding. How long-term provision can be put together is covered on the private retirement page.

Daniel is 32 and works as an electrical engineer in Kassel. Since his pay rise in the spring he has wanted to put €500 a month aside for later, and he has two options on his desk: a quote from a premium private pension provider, and the ETF savings plan he could set up himself in ten minutes. His colleague Jonas spots the quote by the coffee machine and pulls a face. “Look at those set-up costs. Just do it yourself, it’s far cheaper.”

That evening Daniel runs the numbers, and for the first few years Jonas is right, because the depot is comfortably ahead. Then he remembers Jonas telling him, a couple of years back, how much tax he paid when he moved his funds around. Daniel wonders how often he would reshuffle things over 35 years, as his life changes or a fund stops suiting him, and three times seems on the low side. He works it through with three switches anyway, purely as an example, and the contract overtakes the depot a little after year twenty. He also notices that both routes get taxed in the end, which makes the gap smaller than he first thought.

He isn’t signing anything tonight. Instead he records a voice message for his sister Lena, who works for a tax adviser: “You know this stuff. If I stick with it for 35 years and switch a few times, what does the depot cost me in tax, and what happens with the contract when it pays out?” Her reply arrives two minutes later, a single line: “Bring both sets of papers on Sunday and we’ll go through it together.”