From January 2027: The Riester pension will be replaced

For over two decades, the Riester pension was the central instrument of state-subsidized private retirement savings in Germany. However, many investors were dissatisfied – low returns, high costs, and complex eligibility requirements were criticized. Therefore, as of January 1, 2027, the Riester pension will be completely replaced by new, more flexible products.

From 2027 onwards, no new Riester contracts can be concluded under the old model. Existing contracts will continue, but for many self-employed individuals and small and medium-sized enterprises (SMEs), Riester has so far been hardly attractive – numerous self-employed individuals were not even eligible for subsidies. Furthermore, the old products often offered only limited return opportunities due to the mandatory contribution guarantee.

For medium-sized businesses, freelancers and self-employed individuals, the question therefore arises: What options remain for state-subsidized private retirement savings – and how can personal insurance or company pension schemes for employees be redesigned?

The solution: The new retirement savings account from 2027

The new retirement savings account – the official successor to the Riester pension – will launch on January 1, 2027. This system offers significantly greater flexibility, better return opportunities, and more cost-effective investment options.

The most important changes at a glance:

Government funding

Riester pension (until 2026): 25–30 cents per euro

Retirement savings account (from 2027): 50 cents up to €360/year, then 25 cents

Maximum allowance

Riester pension (until 2026): €175–300 Retirement savings account (from 2027): Basic allowance

Up to €540 per year

Warranty obligation

Riester pension (until 2026): 100% contribution guarantee

Retirement savings account (from 2027): No guarantee – up to 100% in equity ETFs possible

Cost

Riester pension (until 2026): 2–3% per year

Retirement savings account (from 2027): 0.1–0.2% for ETFs, max. 1% cost cap

Eligibility for funding for self-employed individuals

Riester pension (until 2026): Often excluded

Retirement savings account (from 2027): Expanded, also for many self-employed people

payout

Riester pension (until 2026): Obligation to convert to an annuity

Retirement savings account (from 2027): Flexible: payout plan, annuity or combination

Tax savings phase

Riester pension (until 2026): Partially taxable

Retirement savings account (from 2027): Fully tax-free (capital gains, reallocations)

Protection of existing contracts

Those who already have a Riester pension contract enjoy full protection of their existing rights. The contract continues, contributions can be made, and the existing subsidy system (basic allowance of €175, child allowance up to €300) remains valid. There will be no automatic termination or conversion.

From 2027 onwards, Riester savers will have three options:

- Keep contract unchanged

- Transfer assets to the new retirement savings account (allowances and tax benefits are retained)

- Suspend the contract and open a new account in parallel

All previous allowances will be retained upon transfer. After five years, the switch is free of charge.

Relevant for medium-sized businesses

The reform is particularly important for the self-employed, freelancers, and entrepreneurs who previously received no or only limited Riester subsidies. The new system opens up new opportunities for:

- Your own private retirement savings

- Company pension scheme for employees

- Integration into existing pension strategies

Practical recommendation

Check in 2026 whether an old Riester contract might still be worthwhile – contracts can only be concluded until December 31, 2026.

From January 2027, monitor new retirement savings products for market readiness.

Seek advice before amending or changing contracts, as tax and corporate law consequences must be individually assessed.

Would you like to know how the new retirement savings account fits into your personal retirement strategy or your company pension scheme? Contact us for a client-specific review – we will guide you through the reform of your private retirement savings and support you with tax and legal coordination.

Note: This text is for general information purposes only and does not replace individual tax or legal advice. Specific details depend on the individual case. Legal details may change before the start date of January 1, 2027.