“What really matters is the total return”

On May 27 the German Federal Ministry of Finance published a new draft pensions package which provides for a reduction in the guaranteed interest rate for life insurance policies with effect from January 1, 2015. What should customers do now? We asked Alf Neumann, Member of the Board of Allianz Leben.


The guaranteed interest rate will fall to a meagre 1.25 percent. Are life insurances now definitely no longer worth it, as the media frequently report?


At present a draft legislative package has been published, which the German cabinet, the Bundestag and the Bundesrat still have to examine. The avowed aim is to make life insurance more attractive by adjusting the law to the current low interest rate environment.
As a result the current debate about the guaranteed interest rate is definitly misleading. What is key for our customers is the actual total return of their life insurance policy. In this respect, the drop in the guaranteed interest rate does not make life insurance less attractive. The other changes contained in the legislative package will act as a corrective to aberrations in the past, particularly the way in which profit shares were distributed, thus making life insurance more attractive.


So what role will the guaranteed interest rate play then?


In life insurance and conventional pension insurance the guaranteed interest rate merely provides a safety net. It only comes into play if the overall interest rate were to fall to the level of the guaranteed interest rate. In recent decades the overall interest, and thus the overall benefits paid out by Allianz, have always been significantly higher than the current guaranteed interest rate.


Our figures show this, too: The total return on the savings elements will remain at a high level at Allianz Leben. If you take the "Klassik" pension concept, in 2014 the total return remains unchanged at 4.2 percent. For the new Allianz pension concept "Perspektive", the minimum is even 4.5 percent. The current guaranteed interest rate is 1.75 percent.


But is the guaranteed interest rate not the real reason why customers opt for a life insurance policy to provide for their old age and to save money?


The excellent launch of our new "Perspektive" pension concept has demonstrated that the guaranteed interest rate is not uppermost in our customers' minds - they certainly want to have a safety net, but they also want to have additional return opportunities as well. 20,000 new "Perspective" policies in 2013 and 15,000 new policies in Q1 2014 alone speak for themselves. Every fourth euro generated by our agents in the area of personal retirement provision comes from a "Perspective" policy. We are also able to offer other alternatives with attractive return opportunities in the form of our pension concepts "IndexSelect" and "Invest alpha-Balance". Here, too we guarantee a minimum pension, as well as the contributions customers have paid in.

Dr. Alf Neumann, Member of the Board of Allianz Leben
Dr. Alf Neumann, Member of the Board of Allianz Leben

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer:


Petra Brandes
Allianz SE
Tel. +49.89.3800-18797
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