Riester and the Altersvorsorgedepot – in plain words
At some point you signed a Riester contract, you have paid in monthly ever since, and once a year you get a letter you file away. Now you hear something is changing. This page explains it the way you would explain it to a friend over coffee.
What Riester actually is
Picture a piggy bank you drop money into every month. The special part: the state drops money in too. Every year it adds €175, and another €300 for each child. In return it has one condition: the money stays in the bank until you retire, and then it is paid out as a monthly pension – not all at once. That is Riester, invented in 2002 and named after the labour minister of the day.
The piggy bank comes in several designs: as insurance (usually with a guarantee and higher costs), as a fund savings plan (invested in equity funds), as a bank savings plan (interest) or as Wohn-Riester (the money sits in your home). Which one you have is on your annual letter – called the Standmitteilung.
Why many people are unhappy
Two reasons. First: many Riester contracts are expensive – costs eat part of the allowance again. Second: because the provider must guarantee that at least what you paid in is there at the end, it can hardly invest in equities. Safe, but little growth. The resulting pension is therefore often disappointingly small.
What the Altersvorsorgedepot is
Flexibly via savings plan or lump sum, from €120 a year. Subsidised up to €1,800 own contribution, tax-deductible up to €6,840.
Up to €540 a year, up to €300 per child (matching the contribution), a one-off €200 under 25.
Gains and income stay untaxed until payout. Without guarantee in the free account, with guarantee in the guarantee product.
Up to 30% at once, the rest as a drawdown plan until at least 85 or a lifelong annuity. Taxed only then – as income.
The Altersvorsorgedepot – AVD for short – is the new piggy bank available from 1 January 2027. The state chips in again, even more: up to €540 a year instead of €175, plus €300 per child. The design is different: the money sits in a securities account you can compose yourself, without a guarantee and with more equities – more chance of growth, but also fluctuation. Anyone who does not want that can take a ready-made “standard account” (cheap, managed by the provider) or a product with a guarantee. At the end there is a choice: lifelong pension, a drawdown plan until 85, or up to 30% in one go.
What happens on 1 January 2027
- No new Riester contracts. The new piggy bank replaces the old one.
- Your old contract stays. Nobody takes it away, nobody changes it. It continues as before, with the old allowances. That is called grandfathering.
- You can have your Riester money moved into the new piggy bank. That is the transfer. The old allowances come along; you repay nothing.
The four things you can do
| You … | What it means |
|---|---|
| … do nothing | Everything stays as it is. Perfectly fine. |
| … stop paying in | The money stays in the old bank and keeps growing, just without new allowances. From 2027 you can direct your savings rate into the new one. |
| … let the new subsidy into the old contract | Some providers offer to continue the old contract from 2027 with the new, higher allowances. Same bank, the state just drops in more. According to providers this cannot be undone. |
| … move | The balance moves into an Altersvorsorgedepot of your choice. The old provider may charge at most €150 – and nothing at all if the contract is older than five years. It does not have to agree. |
What to think about before moving
- Guarantee versus chance. In the old bank what you paid in is guaranteed. In the new one it is not – but it can become more. Someone close to retirement weighs this differently from someone with 25 years to go.
- The moving value. With insurance, less often arrives in the new bank than the letter shows as balance. That figure is called the transfer value and is on the statement or available on request.
- Children and low income. Anyone earning little with several children sometimes gets more allowance in the old system than in the new. That can be calculated.
- Do not start retirement before 2027. Anyone starting the payout before the turn of the year stays in the old logic.
What this site does for you – and what it does not
This site does not tell you what to do. It shows you which rules apply to your contract, what the move costs and how it works – so you can decide yourself, alone or with a consumer advice centre. The switch check needs six details, or you simply photograph your statement.
The most important words
| Word | Means |
|---|---|
| Zulage (allowance) | The amount the state puts into your piggy bank each year |
| Standmitteilung (statement) | The annual letter from the provider with balance, costs and allowances |
| Übertrag (transfer) | Moving the balance from one contract to another |
| Übertragungswert (transfer value) | The amount that actually arrives when moving |
| Bestandsschutz (grandfathering) | Your old contract may continue as before |
| Altersvorsorgedepot (AVD) | The new piggy bank from 2027 – a securities account with state subsidy |
| Standarddepot (standard account) | The ready-made, cheap variant, managed by the provider |
| Garantieprodukt (guarantee product) | The variant with a guarantee on 80 or 100% of contributions |
| Auszahlungsplan (drawdown plan) | The money is paid in instalments until your 85th birthday; what is left is inherited |
| Rentenfaktor (annuity factor) | How much monthly pension you get per €10,000 of balance – in the insurance policy |
Quick answers
Do I have to act quickly now?
No. There is no deadline. Your contract continues, and you can move from 2027 at any time.
Do I lose my allowances when moving?
No. All allowances stay. Only in the year of the move is the moved money not subsidised again – your ongoing contributions are.
Is the new piggy bank better?
It depends – on your costs, remaining term, children and how much the guarantee matters to you. That is exactly what the switch check shows as facts, without a verdict.
What you can check now
- Find your latest statement – it answers most questions.
- Which design does your contract have: insurance, fund savings plan, bank savings plan or Wohn-Riester?
- How many years remain until retirement?
- Retirement Provision Reform Act (Altersvorsorgereformgesetz), Bundestag 27 March 2026, Bundesrat 8 May 2026, promulgated 26 May 2026 (BGBl. 2026 I No. 156)
- Federal Ministry of Finance, FAQ on the reform of private pension provision
This page provides general information about statutory rules. It is not legal, tax or investment advice and makes no recommendation for any individual contract. For a personal assessment, consumer advice centres (Verbraucherzentralen) or licensed advisers are the right address – where to get advice.