From 1 January 2027, the Riester pension is being replaced. In its place comes the Altersvorsorgedepot – a state-subsidised securities depot that lets you invest in ETFs, with no mandatory capital guarantee.
This is not a proposal. It is law: the Bundestag passed the pension reform act on 27 March 2026, the Bundesrat approved it on 8 May 2026.
For families, one figure matters more than any other, and almost nobody mentions it: 300 euros child allowance per child per year – for a contribution of just 25 euros a month. It is the highest subsidy rate in the entire system.
This article explains what the pension depot is, what the state actually pays – and which two rules can cost international families a great deal of money.
As of July 2026.
An Altersvorsorgedepot is a contract with a provider in which guarantees are dropped in favour of higher return potential. You can invest in funds and ETFs.
That is the key break with the Riester pension: there, the contribution guarantee forced providers into cautious investing, which suppressed returns. That requirement is gone.
There are three product categories:
The pension depot: you decide what to invest in. A statutory positive list defines which assets are permitted – ETFs and funds are included. No capital guarantee.
The standard depot: the simplified version for anyone who does not want to make investment decisions themselves. Two provider-selected funds – one cautious, one higher-risk. In the years before retirement, holdings are automatically shifted into the safer one. Here a cost cap applies: effective costs may not exceed 1.0 percent.
The guarantee product: for the security-minded. 80 or 100 percent of contributions are guaranteed – but returns are generally lower.
Also new: alongside private providers, a publicly organised standard depot is planned. The regulation needed for it does not yet exist.
This is where the real value sits – and the system has changed.
The basic allowance (Grundzulage)
For every euro you contribute, the state adds 50 cents – up to a contribution of 360 euros a year. For further contributions up to 1,800 euros, you receive 25 cents per euro.
Maximum basic allowance: 540 euros per year.
The child allowance (Kinderzulage) – the key point for families
One parent receives, per child, 1 euro for every euro contributed, up to a contribution of 300 euros.
In other words: 25 euros a month = 300 euros contributed per year = 300 euros from the state. A 100 percent subsidy rate. Per child.
The old tiering by birth year is gone – there are no more „185-euro children".
The career-starter bonus
Anyone under 25 when they open a contract receives a one-off 200 euros on top. Relevant for your child, once they begin themselves.
The limits
Minimum contribution to qualify: 120 euros a year (10 euros a month).
Maximum subsidised contribution: 1,800 euros a year.
Maximum you may pay in: 6,840 euros a year.
On top of this, contributions can be claimed as special expenses (Sonderausgaben) on your tax return. The tax office automatically checks whether you are entitled to a further tax benefit beyond the allowances.
Say you set aside 200 euros a month – 2,400 euros a year.
Of that, 1,800 euros is eligible for subsidy:
360 euros × 50 % = 180 euros
1,440 euros × 25 % = 360 euros
Total basic allowance: 540 euros
With one child, the child allowance is added:
300 euros × 100 % = 300 euros
The result:
Your 2,400 euros becomes 3,240 euros – before a single cent of investment return.
With two children it would be 3,540 euros. The child allowance applies per child.
What this means over time: the allowances flow directly into the depot and are invested alongside your own money. So they generate returns themselves. Over 30 or 40 years that makes a substantial difference – not because of the allowance alone, but because of the compounding on it.
Note: investment performance is not included in this example and depends on what you hold. ETFs fluctuate – over long periods this has historically evened out, but it is not guaranteed.
If you moved to Germany from abroad, or might leave again one day, rules apply to you that appear in almost no guide.
1. Moving outside the EU/EEA: you must repay the subsidies.
This is the expensive one. If, from the start of the payout phase, your residence is in a country outside the EU or the European Economic Area, this counts as „schädliche Verwendung" – harmful use.
The consequence: all allowances and tax benefits granted must be repaid.
This also applies if you live in the EU but are treated as resident elsewhere under a double taxation agreement.
Concretely: if you are American, British, Canadian or Australian, living in Germany, and there is any realistic chance you will return home in retirement, you need to know this before you sign – not after.
Moving within the EU/EEA is unproblematic. Outside it, it gets expensive.
2. You have to be eligible in the first place.
The subsidy generally requires compulsory membership of the German state pension insurance. What is new: self-employed people and members of professional pension schemes (doctors, lawyers, architects) are now eligible too – previously they were not.
Not eligible include voluntarily insured people without further qualifying criteria, and mini-jobbers who have opted out of pension insurance.
These are exactly the structural questions we work through with international families before anything is signed.
Look at the pension depot. A child allowance of 300 euros per child for a 25-euro monthly contribution is a subsidy rate you will not find anywhere else. If you have children and intend to save for retirement anyway, you are leaving money on the table otherwise.
Watch the costs. The 1.0 percent cap on effective costs applies only to the standard depot – not to every product on the market. For everything else, you have to check yourself. One percent more in costs eats a substantial share of your return over 30 years.
But here is the decisive point:
The pension depot is retirement provision. The money is locked until retirement age: payout from 65 at the earliest, 70 at the latest. You can only access it earlier in narrow exceptions – for owner-occupied property, or a one-off partial payout of up to 30 percent at the start of the payout phase.
When parents come to us wanting to save for their child, they almost never mean their child's pension. They mean a driving licence, university, a first flat, the start of adult life.
The pension depot is not built for any of that. A child savings plan your child can access at 18 or 25 is something fundamentally different.
Both have their place. Just do not confuse them – and do not let anyone tell you that state subsidies make a separate savings plan unnecessary.
When does the pension depot become available?
Providers can offer the new products from 1 January 2027.
How much is the subsidy?
Up to 540 euros basic allowance per year, plus 300 euros child allowance per child, plus a one-off 200 euro career-starter bonus if you open a contract before your 25th birthday.
What is the minimum contribution?
120 euros a year, i.e. 10 euros a month. For the full child allowance, 300 euros a year (25 euros a month) per child.
Can I invest in ETFs?
Yes. That is the heart of the reform: the pension depot drops the guarantee requirement and permits funds and ETFs.
When can I access the money?
From 65 at the earliest, 70 at the latest. Earlier only if you are already drawing a state pension. Exceptions exist for owner-occupied property and a one-off partial payout of up to 30 percent.
What happens to my Riester contract?
It is protected. You can continue it as before, switch to the new subsidy system, or take out a new contract. From 2027, no new Riester contracts can be opened.
What if we leave Germany?
Within the EU/EEA, no problem. If your residence is outside, this counts from the start of the payout phase as harmful use – all allowances and tax benefits must be repaid.
Are self-employed people eligible?
Yes, and this is new. Self-employed people with income under §15 or §18 EStG, and members of professional pension schemes, are now directly eligible.
Does this replace a child savings plan?
No. The pension depot is locked until retirement age. For education, a driving licence or a first flat, you need a separate savings plan.
As of July 2026. The Altersvorsorgereformgesetz was passed by the Bundestag on 27 March 2026, approved by the Bundesrat on 8 May 2026, and published in the Federal Law Gazette (BGBl. I No. 156 of 29 May 2026). It takes effect on 1 January 2027.
Sources: German Federal Ministry of Finance – FAQ on the reform of subsidised private pensions (as of 5 May 2026), Federal Law Gazette I No. 156 of 29 May 2026, German Income Tax Act (EStG).
This article is general information and does not replace individual tax or legal advice.
About the author
Nabil Khan holds a Master of Science in Economics and is the founder of ETF4Kids, helping families and expats in Germany build structured, long-term wealth for their children. ETF4Kids GmbH is licensed as a financial investment broker (§34f GewO), insurance broker (§34d GewO) and real estate loan broker (§34i GewO) by the IHK Region Stuttgart.
