Riester, Rürup & subsidised pensions in Germany 2026

In depth

The 2026 reform and the move to the pension depot

The Bundestag passed the reform of private retirement saving on 27 March 2026, the Bundesrat on 8 May 2026; the new products launch on 1 January 2027. At its core is the switch from Riester’s guarantee-based logic to a return-oriented pension depot holding shares, funds and ETFs. The subsidy is tiered: 50 cents per euro on the first 360 € of own contributions a year, 25 cents per euro from 360 to 1,800 €, plus a base allowance up to 540 €/year and 300 € per child from a 25 €/month saving rate. Important for planning: existing Riester contracts stay fully payable – but a new sign-up under the old model is ruled out from 2027. Anyone still considering entering Riester today should wait for the depot instead.

Young people, children and the early-start pension

For the start of working life, from 2027 there is a one-off career-starter bonus of 200 € if the contract is opened before the 25th birthday – a small but early boost that, given the long investment horizon, has outsized effect. Separately stands the early-start pension, a distinct 2026 law: from age 6 the state pays 10 € a month (120 € a year) into a pension depot for every child, starting with the 2020 birth cohort – with no contribution from the family. Over twelve to sixteen years of childhood, this builds into a foundation that, thanks to compound interest, can keep growing for decades. Parents can add their own payments and so use the depot’s child allowance. With children, the advantage of starting early shows most clearly of all.

Rürup, workplace pensions and the full calculation

Rürup (Basisrente) remains stable in 2026 and is aimed above all at the self-employed and high earners with a heavy tax burden: contributions have been 100 % deductible as special expenses since 2023, up to 30,826 € (single) or 61,652 € (married). The price is high inflexibility – the capital cannot be cancelled, capitalised or freely inherited, and is paid out only as a lifelong pension. Workplace pensions via salary sacrifice stay just as relevant, especially when the employer adds a top-up. What decides everywhere is the full calculation: what does the subsidy give today, what does the contract cost each year (no more than 1.0 % for the standard depot), and how heavy is the deferred taxation in the payout phase? Only „subsidy today minus costs and taxes tomorrow“ reveals the real net gain.

When keeping your old Riester still pays

A common 2026 worry: "My Riester is frozen out for new savers, so I should cancel mine." That reflex can be expensive. Cancelling (rather than letting it rest) usually means repaying the state allowances and any tax relief you already claimed, and you crystallise the provider's front-loaded costs without recovering them. A worked illustration (figures illustrative): imagine a contract where roughly 1,200 EUR of acquisition costs were charged in the early years. If you cancel at year eight, those costs are already sunk — but you also hand back, say, several hundred euros of subsidies. Paid-up and left running, the same contract keeps compounding on money that already absorbed those costs. A sensible decision framework: first ask whether the contract still earns the full allowance for your household this year (children matter here). If yes, keep contributing enough to secure it. If the allowance no longer applies to you, consider setting it to paid-up rather than cancelling, so the accrued guarantee and subsidies survive. Only weigh a full exit or a provider switch after checking the guaranteed benefit, the remaining costs, and the tax consequences of any lump-sum withdrawal. Treat the sunk cost as gone, and decide on future value alone.

The taxman waits: retirement-phase surprises

The subsidy headlines focus on the paying-in years, but the tax bill lands in retirement, and beginners routinely underestimate it. Both Rürup and Riester pensions are taxed as income when they pay out; you deferred tax, you did not erase it. An illustrative sequence: a self-employed saver deducts Rürup contributions during high-earning years in their forties and fifties, saving tax at a high marginal rate. In retirement their taxable income is lower, so the pension is taxed more gently — and that gap is where the real benefit sits. The expensive mistake is assuming retirement always means a low tax rate. If you draw a Rürup annuity plus a workplace pension plus rental income plus investment gains, your combined retirement income can push you back into a meaningful bracket. A useful rule of thumb: the bigger the tax saving today relative to your expected retirement bracket, the stronger the case; if you expect similar income in retirement, the advantage shrinks to mostly deferral. Also note that Rürup pays out only as a lifelong monthly annuity — no lump sum, no early access. Model the retirement income mix, not just the deduction, before committing large sums.

Guarantees, costs and the ETF question

Older Riester products often carried strong capital guarantees, which sound reassuring but quietly cap growth. To promise your paid-in capital back, an insurer must park much of the money in low-yielding safe assets, leaving little to ride the stock market over decades. The new subsidised pension depot flips this: it holds shares, funds and ETFs, accepting swings in exchange for higher long-run return potential, and there is no full nominal guarantee. An illustrative contrast over a long horizon: a heavily guaranteed contract might grow modestly, while an equity-based depot has historically had more room to compound — though it can also fall in any given year. The beginner mistake is choosing purely on the word "guarantee" without asking what it costs in foregone return, or, conversely, chasing equities with money you need in five years. A cleaner framework: match the risk to your timeline. Decades from retirement, a low-cost, broadly diversified equity ETF depot suits many savers. Within a handful of years of drawing the money, capital protection matters more. Above all, scrutinise ongoing fees, because in tax-advantaged wrappers high running costs can silently swallow much of the subsidy you were trying to capture.

Sequencing your pension pillars sensibly

People often ask "Riester or Rürup or depot?" as if only one can win. In practice the smarter question is order: which euro goes where first. A widely used priority logic (education, not advice): first capture any "free" money — an employer match on a workplace pension is typically the highest guaranteed return you will ever see, so leaving it on the table is the classic first mistake. Next, secure subsidies you actually qualify for; for a family, child-linked allowances on an existing Riester can lift the effective return meaningfully. Then, if you are self-employed with a high marginal tax rate and little other tax-advantaged room, Rürup contributions become compelling, because the deduction is worth most to high earners. Finally, keep flexible money outside these locked wrappers — ideally a plain low-cost ETF savings plan you can actually access before retirement. An illustrative pitfall: a self-employed 35-year-old pours everything into Rürup for the tax break, then faces a cash crunch with no reachable reserve, because Rürup cannot be surrendered or borrowed against. Liquidity is part of the plan, not an afterthought. Fund the emergency buffer and accessible investing alongside the tax-optimised pillars, not after them.