Altersvorsorgedepot: Germany's new subsidised retirement account

The Riester pension was complicated, often expensive and had to guarantee every euro paid in. That held returns back. The Altersvorsorgereformgesetz (pension reform act) keeps state support but rebuilds it. The new Altersvorsorgedepot is a subsidised contract without a guarantee that invests in funds such as ETFs. Guarantee products remain, now with a 100 % or 80 % guarantee. Every provider must also offer a simple standard depot (Standarddepot).

You qualify if you pay mandatory contributions to the German statutory pension insurance. That covers employees, apprentices, mini-jobbers who did not opt out, parents during the child-raising period and many people on unemployment benefit. Civil servants can join if they consent to data sharing. New: self-employed people with business or freelance income who file a tax return and are under 67, and mandatory members of a professional pension scheme. A spouse without their own eligibility can get up to 175 € through the eligible partner.

The law has a fixed positive list. Allowed are investment funds and ETFs rated risk class 5 of 7 or lower in their key information document, certain open-ended public funds and euro bonds from states and public bodies. Single stocks are not included. In the standard depot the provider picks two funds, one cautious and one with more growth potential. You choose the split. From five years before retirement, money is gradually shifted into the cautious fund unless you agree otherwise.

The subsidy grows with what you pay in. On the first 360 € a year the state adds 50 cents per euro, on everything up to 1,800 € another 25 cents. Paying 30 € a month, so 360 € a year, gets you 180 €. At 100 € a month (1,200 €) it is 180 € plus 210 €, so 390 €. At 150 € a month (1,800 €) it is 540 €. For each child you receive Kindergeld for, you get 1 € per euro saved, up to 300 €. There is no subsidy unless you pay at least 120 € a year yourself. If you are under 25 at the start of the year, you get a one-off 200 € extra.

While you save, gains inside the contract are not taxed. You can also claim contributions up to 1,800 € plus the subsidy as special expenses (Sonderausgaben) in your tax return. The tax office then checks whether you are owed a tax benefit beyond the subsidy. The catch comes later: payouts from subsidised contributions are fully taxed at your personal income tax rate. This is called deferred taxation. For many people that rate is lower in retirement than during their working life.

Payouts start at 65 at the earliest and 70 at the latest. Earlier is only possible if you already receive a state old-age pension or civil service pension before 65. You then choose a lifelong annuity or a withdrawal plan that runs to at least age 85. Up to 30 % of the capital can be paid out as a lump sum at the start. If you take subsidised money out earlier, it counts as harmful use (schädliche Verwendung): you repay the subsidies and tax benefits. One exception is a home you live in yourself, if your contract offers that option.

Riester contracts signed by the end of 2026 are grandfathered. You can keep them with the old subsidy. You can also tell your provider that the new subsidy should apply to your old contract from now on. That choice is final. Or you can transfer the balance to an Altersvorsorgedepot without repaying past subsidies. Switching and setup costs may apply. After switching, there is no way back to the old rules.

Both can hold ETFs, but they follow different rules. In a regular brokerage account you are free: buy what you want and access your money any time. Gains above the 1,000 € annual saver's allowance are subject to flat-rate capital gains tax. There is no subsidy. In the Altersvorsorgedepot you get subsidies and pay no tax while saving. In return, the money is locked until at least 65, the choice of investments is limited and payouts are fully taxed. Which fits better depends on your income, your children and how much flexibility you need.