My LV1871 pension plan shows a 20% loss : is this normal?

• Early-year negatives are common because German pensions often front-load distribution costs and apply policy charges before compounding has time to outgrow them.
• Check whether your “loss” is based on market value of units or the surrender value (includes cancellation/contract effects).
• Run a like-for-like comparison: your cumulative net contributions vs current fund unit value vs Rückkaufswert, and confirm total annual cost (TER of funds + policy charges).

• Standmitteilung (annual statement): shows paid-in contributions, unit holdings, current unit price, and surrender value.
• Kostenübersicht (cost disclosure): breaks down acquisition costs, ongoing policy/admin fees, rider costs (e.g., disability, guarantees).
• Fondsauswahl: which funds/ETFs you hold inside the policy and their TERs.
• Garantien/Risikoschutz: any guarantee or insurance riders increasing costs.

• Zillmerung / acquisition costs: a large portion of distribution costs is recognised early; the policy “recovers” over time.
• Policy charges: fixed euro fees plus % of assets create a drag when the account is still small.
• Guarantee/rider costs: capital guarantees, BU riders, or death benefits raise charges.
• Market timing: if you started near a market peak, unit values may be down temporarily.

1. List totals: sum your net contributions (after any rebates).
2. Extract three values today:
   • Unit value (units × current price)
   • Rückkaufswert (surrender value)
   • Difference between the two (this is the “contract effect” today)
3. Check annual cost: fund TERs + policy/admin + rider costs.
4. Compare with a hypothetical ETF-only plan (outside of an insurance wrapper) using our ETF Investment Calculator to understand fee drag vs flexibility.
5. Timeline reality: if your horizon is 15–30 years, early negatives can be amortised; if you might leave Germany soon, reassess suitability.

• You paid in €12,000 over 3 years.
• Unit value is €11,100 (markets slightly down); Rückkaufswert is €9,600 after early costs.
• Gap to unit value: €1,500 = contract economics today (mostly front-loaded costs).
• If markets recover and the account grows, that gap matters less over time; if you surrender now, you realise that gap.

• Switching funds: sensible if allocation is off (too niche, too expensive). Fund switches inside the policy are usually tax-neutral.
• Partial/total surrender: only after you model contract penalties, tax impact, and the opportunity cost. Many policies improve charge ratios over time.
• Pause or reduce contributions if the wrapper no longer fits your plan; redirect new saving to a transparent ETF portfolio while keeping the contract invested if long-run benefits still exist.

• Judging the plan by surrender value in year 1–5 without understanding front-loaded costs.
• Comparing to ETFs without adding up all policy + fund costs on both sides.
• Holding too many high-TER funds inside the policy.
• Surrendering just before a market rebound or near a bonus crediting date without checking details.

1. Pull your Standmitteilung and Kostenübersicht; compute the three values above.
2. Align the asset mix with your risk tolerance (simplify to broad, low-cost funds).
3. If relocating soon or unhappy with charges, consider reducing contributions and shifting new investments to ETFs.
4. Review with an independent advisor before surrender; the cheapest choice is not always to exit today.

⚠️ IMPORTANT LEGAL DISCLAIMER:

This content is for educational and informational purposes only and does not constitute financial, tax, legal, or investment advice. You should not rely on this information as a substitute for, nor does it replace, professional financial or tax advice. Always consult with qualified professionals (tax advisors, financial planners, lawyers) before making any financial decisions or taking any actions based on this information.

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Disclaimer: This is general information and may differ for individual cases. Learn more about financial planning with Financemate in a discovery call. Always base decisions on your specific documents and current laws.