What are the differences in investment strategy?
ETF plans invest in Exchange-Traded Funds (ETFs) that track indexes, like the MSCI World. You can choose any ETF you like.
Feather's private pension offers two simple investment strategies.
“All-in” that invests 100% in stock market ETFs
“Aggressive” that invests 75% in ETFs and 25% in government bonds ETFs
You can read more about our investment strategies here.
What are the differences in fees?
ETF plans typically have lower fees as they are passively managed. Average fees for ETFs are approximately 0,2% p.a. on average
Feather's private pension insurance costs 1,50€ per month + 0,72% p.a. What differs us from the insurance market is, that we offer our private pension with 0 upfront fees. So more money can fully go into the investment from the start
What are the differences in insurance coverage?
ETF plans do not offer insurance coverage as they are solely investment products
Feather's private pension provides a death benefit to beneficiaries in case of the insured's passing
What are the differences in payout and tax treatment?
With the ETF plan, you can withdraw money however you prefer. You pay normal taxes on the returns of the stock market with an ETF plan
With a private pension, you can choose whether you want an additional lifelong monthly payout next to the statutory pension or a one-off capital payout. In general, you have huge tax benefits when you retire. This is one of the main reasons why private pensions are so efficient. You can also withdraw money before retirement but similar to the ETF plan you then have to pay normal taxes on the returns of the stock market
Comparison table for illustration
Disclaimer: This is only an example on a high level with many assumptions and does not show the exact amounts in reality.
| Private pension | ETF plan |
Monthly contribution in EUR | 300 | 300 |
Investment horizon in years | 30 | 30 |
Return rate p.a. | 8% | 8% |
Fees total in EUR | 55.565,78 | 15.725,12 |
Capital before taxes in EUR | 369.925,96 | 409.766,62 |
Returns in EUR | 262.465,96 | 301.766,62 |
Taxes in EUR* | 26.246,60 | 79.606,03 |
Tax benefits in EUR | 131.232,98 | 0 |
Capital payout after taxes in EUR | 343.679,36 | 330.160,59 |
*Taxation for ETF (capital gains tax without church taxes) 26,38%
*Taxation for private pension with an assumed personal tax rate in retirement of 20%
Which option should I pick?
Choosing between ETF plans and private pensions in Germany depends on individual preferences. ETF plans offer more investment options and lower costs, while private pension provides insurance protection, are easier to handle, and have useful tax benefits when you retire.
The good news is you don't have to focus on only one option! It makes total sense if you know capital investments to have an ETF plan for mid/long-term investment and a private pension only for your retirement to fully profit from the tax benefits.
If you're not familiar with ETF investments, we suggest not starting an ETF plan on your own. It would be better to start with private pension until you've become more familiar.
Have more questions? Contact our support team to speak with an expert.