Subsidised and locked, or free and without subsidy?
From 1 January 2027 Germany has the retirement savings account: you save in funds and ETFs, the state adds subsidies, and returns stay tax-free until payout (pension reform act, BGBl. 2026 I No. 156; as of 24 September 2026). Many investors, however, already have a regular ETF savings plan. Is it worth switching or adding the new account? We compare both routes honestly – with their strengths and weaknesses.
What speaks for the retirement savings account
- Subsidies: up to 540 € basic subsidy a year, plus up to 300 € per child. On the first 360 € of own contributions the subsidy rate is 50 %.
- Tax-free saving phase: no capital gains tax and no advance lump-sum tax while the money is in the account.
- Additional tax benefit: with a higher marginal tax rate, the tax office refunds an extra amount via the comparison check.
- Cost cap: the standard depot may charge at most 1.0 % effective costs a year.
What speaks for a regular ETF savings plan
- Flexibility: you can access your money at any time – for a home, a sabbatical or an emergency.
- No ceiling: you can save as much as you like; the retirement savings account allows at most 6,840 € a year, with 1,800 € subsidised.
- Favourable taxation: gains are subject to capital gains tax; for equity ETFs 30 % of income is tax-exempt (partial exemption), and the saver's allowance stays completely tax-free.
- Very low costs: broadly diversified ETFs often cost less than 0.3 % a year.
The numbers
Our retirement savings account calculator puts both routes side by side: same own contribution, same return, same costs. In the retirement savings account, payouts are taxed at your personal rate in retirement; in the ETF plan, capital gains tax applies to the profits.
Example: age 35, 150 € a month until 67, 6 % return, 0.8 % costs, marginal tax rate today 30 %, tax rate in retirement 20 %, no children. Before tax, the retirement savings account reaches around 186,000 € and the ETF plan around 144,000 €. After tax, the subsidised account leaves around 149,000 € plus just over 5,000 € in tax refunds during the saving phase; the ETF plan around 128,000 €. The advantage of the retirement savings account is therefore just over 26,000 €.
With children the gap becomes much larger. A mother of two who saves only 25 € a month receives 750 € of subsidies a year – more than twice her own contribution. Over 37 years this adds up, in our model, to an advantage of more than 40,000 € over an ETF plan of the same size.
When the ETF plan can come out ahead
- Very high contributions: someone paying in 570 € a month still only gets 540 € basic subsidy. The subsidy rate then falls below 8 %, and the advantage depends heavily on the tax rate in old age.
- High tax rate in retirement: if you expect high income in old age, you pay correspondingly more tax on the payouts.
- Much higher costs in the retirement account: if costs are close to the cap while your ETF plan costs almost nothing, the lead shrinks.
- Money needed before 65: using the money in a non-permitted way can mean subsidies and tax benefits have to be repaid.
Combining both
For many people the best solution will be a combination: the subsidised part – up to 150 € a month or, with children, at least 25 € – into the retirement savings account, everything above that into a regular ETF savings plan. That way you collect the subsidies and still stay flexible. Calculate what a regular plan can deliver in the long run with the ETF savings plan calculator. The full overview of subsidies, tax and payout is in the guide Retirement Savings Account 2027.
Conclusion
With small and medium contributions, with children and over long periods, a lot speaks for the retirement savings account. A regular ETF plan remains the better choice for money you might need before retirement and for amounts above the subsidy limit. The figures in this article are model calculations with a constant return and simplified taxation; all information without guarantee and not investment advice.