German Pension Depot from 2027: What Families Need to Know

From 2027

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.

In short

The answer in 30 seconds

The pension depot (Altersvorsorgedepot) is Germany’s new state-subsidised retirement plan from 1 January 2027 — for the first time with real ETFs instead of a guarantee requirement. The state adds up to €540 basic allowance a year, plus €300 per child. For eligible parents it is a strong building block for their own retirement — it does not replace a child savings plan, because the money is locked until retirement age.

Starts on 1 January 2027 (pension reform act, Federal Law Gazette I No. 156)
Up to €540 basic allowance per year, plus €300 child allowance per child
ETFs and funds permitted — the guarantee requirement is dropped
Payout from age 65 at the earliest — your child still needs its own plan
Existing Riester contracts are protected

The three variants

What is a pension depot?

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.

It comes in three variants. Confusingly, one of them carries the same name as the category itself. Here is how they differ:

Vergleich
	Full ETF choice Pension depot You decide	Standard depot The provider decides	Guarantee product Security over returns
Who picks the investments	You do — from a statutory positive list; ETFs and funds are included	The provider — two set funds, one cautious, one higher-risk	The provider
Guarantee on contributions	No capital guarantee	No capital guarantee	80 or 100 % of the contributions you paid in
Return potential	Highest — no guarantee holding the investment back	Medium — holdings shift automatically into the safer fund before retirement	Generally the lowest
Costs	No statutory cap — you have to check yourself	Capped: effective costs of 1.0 % at most	No statutory cap — you have to check yourself
Right for you if	you want to decide what you invest in	you would rather not deal with it and want costs kept in check	security matters more to you than returns

One more thing: alongside private providers, a publicly organised standard depot is planned. The regulation needed for it does not yet exist — so it is not something you can count on yet.

The numbers

The subsidies:
What the state actually adds

This is where the real value sits — and the system has changed. The state contributes on two tracks: a basic allowance for you and a child allowance for each child.

up to 540 €

Basic allowance per year

50 % on the first €360, 25 % above

300 €

Child allowance per child

every year, on top of the basic allowance

200 €

Career-starter bonus

one-off, for contracts opened before your 25th birthday

from 10 €

Minimum monthly amount

€120 a year is enough to qualify

€360 contribution

180 €

€600 contribution

240 €

€1,200 contribution

390 €

from €1,800

540 €

€360 contribution	180 €
€600 contribution	240 €
€1,200 contribution	390 €
from €1,800	540 €

Basic allowance by your own annual contribution (50 % on the first €360, 25 % up to €1,800). The €300 child allowance per child comes on top.

Run it yourself

What does the state add for you?

The subsidy is tiered and capped. Move the amount and see the point at which every further euro adds nothing.

Your contribution per month: 100 €

Children eligible for the allowance

Your own money per year	1.200 €
Basic allowance	390 €
Child allowance	300 €
The state adds	690 €

Every euro sits within the funded range — here the state pulls its weight.

Altersvorsorgereformgesetz: Bundestag 27 March 2026, Bundesrat 8 May 2026, BGBl. I No. 156 of 29 May 2026, in force 1 January 2027. Basic allowance 50 cents per euro on the first €360, 25 cents up to €1,800; child allowance €300 per child; minimum €120 a year. Not individual tax advice.

The detail

How the subsidies work

You have the numbers above. If you want the exact mechanics behind them, open them up here.

The basic allowance (Grundzulage)

50 cents on every euro up to 360 € contributed — 25 cents on every euro after that. 540 € a year at most.

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)

From 25 € a month (300 € a year) you get the full 300 € — for every child you receive Kindergeld for.

Kindergeld is the qualifying condition. For every child you receive Kindergeld for, one parent receives 1 euro of allowance for every euro contributed — up to a contribution of 300 euros a year.

In other words: 25 euros a month = 300 euros contributed = 300 euros from the state. A 100 percent subsidy rate. Per child.

Contribute less and you receive the allowance pro rata — it stays at 1 euro per euro paid in. The old tiering by birth year is gone: there are no more “185-euro children”.

The career-starter bonus

A one-off 200 € for anyone under 25 when they open a contract.

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

Subsidies start at 120 € a year, run up to 1,800 €, and you may pay in up to 6,840 €.

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.

Concretely

A worked example

Say you set aside 150 euros a month — exactly the amount the state subsidises up to. Here is what that becomes:

Your contribution (150 € × 12): 1,800 €
Basic allowance: 50 % on the first 360 €: + 180 €
Basic allowance: 25 % on the next 1,440 €: + 360 €
Child allowance for one child: + 300 €
State allowances in total: 840 €
Lands in the depot in year one: 2,640 €

150 euros a month is the ceiling of the subsidy. Pay in 200 and you get not one cent more from the state: the allowances stay at 840 euros while the subsidy rate drops from 47 to 35 percent. You may still pay in more — up to 6,840 euros a year.

With two children it is 1,140 euros in allowances and so 2,940 euros in the depot; the child allowance applies per child. Allowances flow straight into the depot and are invested with it — over 30 or 40 years what counts most is the compounding on top. Investment performance itself is not included here.

For expats

For international families:
Two rules that can cost you dearly

If you moved to Germany from abroad, or might leave again one day, two rules apply to you that appear in almost no guide. The first one can cost you the entire subsidy.

Moving outside the EU/EEA

Move outside the EU or EEA from the start of the payout phase and you must repay every allowance and tax benefit you received.

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.

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.

The honest comparison

Does the pension depot replace a child savings plan?

This is the question parents ask us most often. Three requirements, three routes — see for yourself where the crosses fall.

What this money has to do

The ticks change with the option you pick on the right.

State subsidy 300 euros per child per year is a rate you will not find anywhere else.
Available when your child needs it A driving licence, university, a first flat — at 18 or 25, not at 65.
Works for your own retirement — tax-privileged Not just for the child: you can build your own provision with it too.

Pension depot Child savings plan Both side by side

Pension depot

Subsidised, but locked

2 of 3 met

The best subsidy rate in the system — but the money is gone until 65. Useless for anything before that.

State subsidy: Up to 540 euros basic allowance plus 300 euros per child. The strongest lever in the whole system.
Available when your child needs it: Payout from 65 at the earliest. The driving licence comes almost 50 years sooner.
Works for your own retirement — tax-privileged: That is exactly what it is built for. Contributions are deductible as special expenses; tax falls due on the pension, not before.

Child savings plan

Flexible, unsubsidised

2 of 3 met

It grows with you and is available at any time — but without a cent from the state.

State subsidy: No allowances. What goes in comes from you.
Available when your child needs it: Driving licence at 17, first semester at 19, deposit in their mid-twenties — you decide when to hand it over.
Works for your own retirement — tax-privileged: Held as a policy in a parent’s name, only half the gains are taxable after twelve years and a payout from 62. Switching funds inside the policy triggers no capital gains tax.

Halbeinkünfteverfahren, simplified; as at 2026.

Both side by side

Two goals, two pots

3 of 3 met

The subsidised pot for your retirement, the flexible one for your child. Only together is it complete.

State subsidy: You take the full subsidy through the depot.
Available when your child needs it: Your child’s money sits in the flexible pot, the subsidy in the locked one.
Works for your own retirement — tax-privileged: Two routes to your own retirement: the subsidised one with a lock, the flexible one without.

The pension depot on its own is not enough. You cannot touch this money before 65. The driving licence comes almost 50 years sooner, university shortly after, the deposit on a first flat a little later. None of it can be paid for out of this pot — not in part, not by exception.

If you are saving for your child, you therefore need a second, flexible pot alongside it: a child savings plan you can draw on when life asks you to, not when the law allows it.

When parents come to us wanting to save for their child, they almost never mean their child’s pension. For retirement, the state subsidy is a gift. For the life before it, it was never built.

The reverse is true as well: a child savings plan does not replace the subsidy — but it can do more than its name suggests. Held as a policy in a parent’s name, it can be transferred to the child without a new contract, and until then it is a tax-privileged route to your own retirement. A contract that grows with you.

Both have their place. But only one of them is there when your child turns 18.

Our take

What we tell families

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. One percent more in costs eats a substantial share of your return over 30 years.

And keep the lock in mind. 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.

FAQ

Frequently asked questions

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.

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.

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. Provider product details will be finalised in the certification process — the subsidy logic itself is enacted law.

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.