22H·

ETF basic pension with BUZ

Hello everyone,

I am about to replace my current occupational disability insurance with a basic pension with occupational disability cover.

I currently pay €77 per month for my occupational disability insurance. If I don't become disabled, my paid-in capital will be forfeited. In the event of disability, I would receive a monthly pension of around €1,900 with my current insurance.

I have now been offered a basic pension from Alte Leipziger, which I can also claim for tax purposes. This is not possible with my current contract. With my gross annual salary, this results in tax savings of around 45.4% and a subsidy rate.

The monthly costs for the basic pension would amount to around €115 after tax, without tax deductions it would be around €209 per month.

The cover amounts to € 2,500 per month (the higher amount is due to social insurance), which also corresponds to around € 1,900 in the event of occupational disability. A performance of 6% is required.

I can choose the ETF myself.

My question is: would you choose an ACC or DIST ETF?

You can choose, for example, the $VWRL (-2.49%)
$WEBN (-2.89%)
$VHYG (-1.58%)

A 70/30 portfolio from iShares would also be an option.

My insurance advisor has already made a suggestion:

40% $IWDA (-2.5%)

20% $EIMI (-2.16%)

7,5% $CBUX (-0.66%)

15% $MEUD (-1.9%)

7,5% $XAIX (-3.97%)

10% $SRS22H

I would like to hear your opinion on this.

15 Comments

Uwe@SchlaubiSchlumpf

21H

It's a bit like what consultants like to do. Put your head over the keyboard and see what comes out. -okay, a bit exaggerated. Looks more or less reasonable. Personally, I would stay away from infrastructure ETFs and AI ETFs. Sector ETFs have short legs and often only emerge when the bull run on the sector is over.
EU is weighted higher than the market here. If that's what you want, there's nothing wrong with it.

70%/30 would mean 70% $IWDA 30% $EIMI?
Then I would take 70/30 or the $WEBN.
Possibly even the $VWRL, as the Prime is cheaper but I don't know the tracking error. After a brief AI search, the vwrl seems to have a very low tracking error. The AI can't find any figures for the Prime, but according to the provider it should be less than 1%. So much shot out of my pocket...

What about the costs in your contract? Have you compared them with the existing contract? (Duration of the contract, abstract reference, etc.) It might be cheaper to leave the old BU and set up a new pension plan. Look at how the costs are divided up. I suspect that one part will be used for the BU and one part for the basic pension. I'm also not sure whether the full price of the combined product is deductible.

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Uwe@SchlaubiSchlumpf

21H

@SchlaubiSchlumpf Addendum: Deductibility should be given if the AV is greater than the Rürüp. Clever design, now I'm even angrier at my advisors, who sold me a basic pension for 100 euros and a BU with a mini pension (not basic) for 80 at different times 😂

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Schmon@SchmonInvest

20H

@SchlaubiSchlumpf
Effective costs 1.31%
Individual costs: Acquisition and distribution costs €2,398.96, administration costs €109.60 (annually)

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Schmon@SchmonInvest

20H

@SchlaubiSchlumpf
Monthly contribution for pension: € 98 for BU € 111

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Schmon@SchmonInvest

20H

@SchlaubiSchlumpf Guaranteed pension factor € 27.05

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Uwe@SchlaubiSchlumpf

20H

@SchmonInvest hmm, it's even a bit more expensive than my basic policy. It might be worth looking into a net policy, but the salesperson probably can't offer that. You'd need a fee-based advisor for that. If you have the time, do the math in Excel for comparison with a return of your choice over all years. It takes a little while (for me it took about 1-2 hours at the time). My result was that the Rürüp wins by a small margin compared to your own portfolio due to the tax savings, but not as much as you might think. Especially if the tax rate could fall in old age due to joint assessment. But it does take away a lot of flexibility.

The thing is, you've already paid the distribution system for the BU. You need to know whether you want to pay it again for the share.

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Uwe@SchlaubiSchlumpf

20H

@SchmonInvest is quite blatant. The annuity factor converted into etfs is 3.2% withdrawal per year over the annuity term

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Uwe@SchlaubiSchlumpf

20H

@SchmonInvest sorry, you can tell that I have a strong bias towards insurance companies and salespeople, because I'm stuck with sunken loss fallacy on mine myself

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Schmon@SchmonInvest

19H

@SchlaubiSchlumpf Is that good or bad now? 🤓😅

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Uwe@SchlaubiSchlumpf

19H

@SchmonInvest it is. Many people calculate around 3% inflation-adjusted withdrawals from ETF portfolios when they plan to retire early. However, the expectation is often that there will be something left to bequeath. Of course, that would not be the case here. Sounds safer at first, of course, as they guarantee you the payout according to the annuity factor in an insurance policy. Unfortunately, high inflation is usually not insured. And theoretically, the insurance company can go bankrupt, as well as the insurance mechanisms.

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Schmon@SchmonInvest

19H

@SchlaubiSchlumpf it is? 😅🤓

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View all 2 further answers

Chandra@Chandra

22H

What happens to the distributions during the accumulation phase? (i.e. with a distributing ETF)

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Schmon@SchmonInvest

21H

@Chandra I would also be interested in this, which is why I would prefer an accumulating ETF

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