Starting in January 2027: The Riester pension will be phased out
Jun 18, 2026
For over two decades, the Riester pension was the main instrument of state-subsidized private retirement savings in Germany. However, many investors were dissatisfied—low returns, high costs, and complex eligibility requirements drew criticism. As of January 1, 2027, the Riester pension will therefore be completely replaced by new, more flexible products.
Starting in 2027, no new Riester contracts based on the old model may be entered into. While existing contracts will continue to run, Riester has so far been of little appeal to many self-employed individuals and small business owners—and numerous self-employed individuals were not eligible for subsidies at all. In addition, the old products often offered only limited opportunities for returns due to the requirement to guarantee contributions.
For small and medium-sized businesses, freelancers, and the self-employed, this raises the question: What options remain for government-subsidized private retirement savings—and how can they restructure their own retirement coverage or their company’s retirement plans for employees?
The Solution: The New Retirement Savings Account Starting in 2027
The new retirement savings account—the official successor to the Riester pension—will be launched on January 1, 2027. This system offers significantly greater flexibility, better potential returns, and more cost-effective investment options.
An overview of the most important changes:
Government Subsidies
Riester Pension (through 2026): 25–30 cents per euro
Retirement savings account (starting in 2027): 50 cents up to 360 € per year, then 25 cents
Maximum subsidy
Riester pension (until 2026): 175–300 € Retirement savings account (starting in 2027): Basic subsidy
Up to 540 € per year
Guarantee Requirements
Riester Pension (through 2026): 100% contribution guarantee
Retirement Savings Account (starting in 2027): No guarantee—up to 100% in equity ETFs possible
Fees
Riester Pension (through 2026): 2–3% per year
Retirement Savings Account (starting in 2027): 0.1–0.2% for ETFs, max. 1% cost cap
Eligibility for Subsidies: Self-Employed Individuals
Riester Pension (through 2026): Often ineligible
Retirement Savings Account (starting in 2027): Expanded eligibility, including many self-employed individuals
Payouts
Riester Pension (through 2026): Mandatory annuitization
Retirement Savings Account (starting in 2027): Flexible: payment schedule, life annuity, or a combination
Tax-Deferred Savings Phase
Riester Pension (through 2026): Partially taxable
Retirement Savings Account (starting in 2027): Fully tax-exempt (investment income, portfolio rebalancing)
Grandfathering for Existing Contracts
Anyone who has already taken out a Riester pension plan enjoys full grandfathering protection. The plan remains in effect, contributions can continue to be made, and the old subsidy system (basic allowance of €175, child allowance of up to €300) remains in effect. The plan will not be automatically terminated or converted.
Starting in 2027, Riester savers will have three options:
- Keep the contract as is
- Transfer the balance to a new retirement savings account (subsidies and tax benefits are retained)
- Suspend the contract and open a new account at the same time
If you transfer the balance, all previous subsidies are retained. After five years, the switch is free of charge.
Relevant for Small and Medium-Sized Enterprises
The reform is particularly important for the self-employed, freelancers, and entrepreneurs in small and medium-sized enterprises who, until now, were unable to receive Riester subsidies or could only receive them to a limited extent. The new system opens up new opportunities for:
- Personal private retirement planning
- Employer-sponsored retirement plans for employees
- Integration into existing retirement planning strategies
Practical Recommendations
In 2026, still assess whether an old Riester contract might still be worthwhile—contracts can only be taken out until December 31, 2026.
Starting in January 2027, monitor new retirement savings products as they become available on the market.
Seek advice before amending or changing contracts, as the tax and corporate law implications must be assessed on a case-by-case basis.
Would you like to know how the new retirement savings account fits into your personal retirement strategy or your employer-sponsored retirement plan? Contact us for a client-specific review—we’ll guide you through the private retirement savings reform and assist you with tax and legal planning.
Note: This text is for general information purposes only and is not a substitute for individual tax or legal advice. The specific details depend on the individual case. Legal details are subject to change prior to the program’s launch on January 1, 2027.