The retirement savings account: a successor to Riester
Legal status first: Germany's new retirement savings account (Altersvorsorgedepot) is settled law. The Bundestag passed the pension reform act on 27 March 2026, the Bundesrat approved it on 8 May 2026, and the act was promulgated in the Federal Law Gazette on 29 May 2026 (BGBl. 2026 I No. 156). Providers may offer the new contracts from 1 January 2027. Which products will exist and what they will cost is not yet known. Everything in this article reflects the status as of 24 September 2026.
For more than twenty years the Riester pension was the central instrument of state-subsidised private pension saving in Germany. It was complicated, often expensive and, because of the obligation to guarantee all contributions, low-yielding. The retirement savings account is designed to fix exactly these weaknesses: you save in shares, funds and ETFs, the state adds subsidies, and a guarantee is no longer compulsory. No new Riester contracts can be signed from 2027; existing contracts are grandfathered.
How much support you personally receive depends on your contribution, your children and your tax rate. Our retirement savings account calculator shows subsidies, tax benefit and the possible account value at retirement at a glance. Below we explain the rules step by step.
The basic subsidy: 50 and 25 cents per euro
At the heart of the reform is a contribution-linked basic subsidy (Grundzulage). Unlike Riester, there is no longer a fixed amount that is only paid in full if you contribute a certain percentage of your income. Instead:
- 50 cents per euro for the first 360 € of own contributions a year (30 € a month) – up to 180 € subsidy.
- 25 cents per euro for every further euro up to 1,800 € a year (150 € a month) – up to another 360 €.
- At most 540 € basic subsidy a year.
- Minimum own contribution: 120 € a year, i.e. 10 € a month.
If you save 30 € a month, the subsidy rate is 50 per cent. If you save the full 150 € a month, you receive 540 € on top – 30 per cent of your own contribution. In total you may pay in up to 6,840 € a year, but only the first 1,800 € are subsidised.
The child subsidy: 1 € per euro, for each child
For families, the child subsidy (Kinderzulage) is the real lever. For each child eligible for child benefit there is 1 € of subsidy per euro paid in, at most 300 € per child and year. This applies to children born after 31 December 2007; for older children the amount is 185 €. Crucially, you reach the full child subsidy with just 300 € of own contributions a year – for each child.
An example with two children shows the effect: you pay in 25 € a month, i.e. 300 € a year. On top come 150 € basic subsidy and 2 × 300 € child subsidy. So 300 € of own money becomes 1,050 € in the account. The state support is two and a half times your own contribution. The child subsidy is paid as long as child benefit is paid for the child – usually until the 18th birthday, during training or university until 25. It goes to one parent, usually the one receiving child benefit.
The career starter bonus
Anyone who signs a contract before their 25th birthday receives a one-off additional subsidy of 200 €. The bonus is small, but it encourages people to start early – and starting early is the single most important factor in retirement saving. A 22-year-old saving 50 € a month receives 240 € basic subsidy a year plus the bonus in year one. At 6 % return and 0.8 % costs this can grow to around 146,000 € by 67 – from 27,000 € of own payments.
The tax benefit via the comparison check
In addition to the subsidies, you can claim your contributions as special expenses in your tax return: own contributions up to 1,800 € plus the basic subsidy, at most 2,340 € a year together. The tax office automatically checks whether the tax saving exceeds the subsidy. If it does, you receive the difference as an additional refund.
An example: with a marginal tax rate of 30 % and the full contribution of 1,800 €, the tax saving is 2,340 € × 30 % = 702 €. Minus the basic subsidy of 540 € already paid, 162 € remain as an additional refund. At a 42 % marginal rate it would be 443 €. Important: this amount goes to your bank account, not into the depot. Our calculator therefore shows it separately. We have simplified how the child subsidy is treated in the comparison check; the tax office does the exact calculation.
Who receives the subsidies?
As before, employees subject to statutory pension insurance and civil servants are directly eligible. New: self-employed people with business or freelance income can also receive the subsidies – a group that was largely excluded from Riester. Spouses and civil partners of eligible persons can be indirectly subsidised; their basic subsidy is capped at 175 €.
Costs: a 1.0 % cap for the standard depot
High costs made many Riester contracts unattractive. The new standard depot therefore has a cost cap: effective costs may not exceed 1.0 % a year. During the legislative process 1.5 % was initially discussed; the Bundestag lowered the figure. Other variants, such as products with an 80 or 100 per cent guarantee, are not subject to this cap.
How strongly costs matter becomes clear in a comparison: with 150 € a month, 32 years and a 6 % gross return, the difference between 0.4 % and 1.0 % costs amounts to a five-figure sum at the end. Move the cost slider in the calculator and compare for yourself.
Worked example: age 35, 150 € a month
Take a 35-year-old employee without children who pays in 150 € a month from 2027 until payouts start at 67. Assumptions: 6 % return before costs, 0.8 % costs, 30 % marginal tax rate.
- Own contributions over 32 years: 57,600 €
- Basic subsidies: 32 × 540 € = 17,280 €
- Additional tax benefit: around 162 € a year
- Account value at 67: around 186,000 €
With one child still receiving child subsidy for 15 years, another 4,500 € of subsidy is added, and the account value rises to around 202,000 €. A 50-year-old with the same contribution, by contrast, only reaches around 63,000 €, because compounding is missing 15 years. These figures are model calculations with a constant return; real markets fluctuate.
Payout: from 65, payout plan until 85
The accumulated capital is locked for old age. The payout phase starts at the earliest on reaching age 65, or earlier if you draw a statutory old-age pension. You can then choose:
- Payout plan: the capital is paid out in instalments, at least until age 85. The remainder stays invested in the meantime.
- Lifelong annuity: if you want to insure against longevity, you can choose an annuity.
- Partial lump sum: up to 30 % of the capital can be withdrawn at once at the start of the payout phase.
In the example above (no children), a payout plan from 67 to 85 yields around 1,300 € gross a month. That is a noticeable supplement to the statutory pension. Estimate your statutory pension with our pension calculator.
Taxes: deferred taxation
During the saving phase, gains and income in the depot are not taxed. There is no capital gains tax and no advance lump-sum tax. In return, payouts in old age are taxed at your personal income tax rate – known as deferred taxation. Because income in retirement is usually lower than during working life, the tax rate is often lower too. For contributions above the subsidised 1,800 €, only the earnings portion is taxable; our calculator models this in simplified form.
What about children and the Early-Start Pension?
In parallel, the federal government is planning the Early-Start Pension: 10 € a month from the state for children aged 6 to 18, invested in their own account. The Federal Ministry of Finance stresses that the two systems will be closely linked to allow a seamless transition later. Unlike the retirement savings account, the Early-Start Pension has not yet been passed. See what it could deliver with our Early-Start Pension calculator.
Who benefits from the retirement savings account?
- Families with children: the child subsidy makes even small contributions extremely attractive.
- Low earners and part-time workers: the 50 per cent subsidy on the first 360 € works regardless of income.
- Young people: career starter bonus plus decades of compounding.
- Self-employed: they are eligible for the first time.
The advantage is less clear-cut for people who want to save very large amounts or might need the money before retirement. Only 1,800 € a year are subsidised, and the capital is locked until at least 65. A detailed comparison is in our article Retirement savings account or a regular ETF savings plan?.
Conclusion
The retirement savings account is the biggest reform of private pension saving in Germany since the introduction of Riester. The subsidies are simpler, the investment more return-oriented, and costs are capped. If you already save for retirement, check from 2027 whether at least the subsidised part can go into the new account. Work through your own scenario with the retirement savings account calculator. This article is not investment or tax advice; all information without guarantee.