0, 80 or 100 percent: which contribution guarantee do you need?

Tilman Freyenhagen

Published on 28 July 2026 · Updated on 7 August 2026 · Managing Director & Partner, Alsterspree Verlag GmbH

The new subsidy system: why contribution guarantees are no longer mandatory

With the reform of private pension provision from 2027, the previous statutory requirement for a 100 percent contribution guarantee — which defined the Riester-Rente (Germany's existing subsidised private pension), the predecessor model — falls away. The new Altersvorsorgedepot gives investors, for the first time, a free choice between contracts with no contribution guarantee (0 percent) and variants with 80 percent or 100 percent capital preservation^[1]. This strategic departure from rigid guarantee requirements is intended to counter the gradual loss of purchasing power in old age and to make higher economic growth accessible through broadly diversified asset classes.

From mandatory guarantees to return-oriented capital protection

The previous guarantee requirement forced providers to shift substantial portions of contributions into low-yield bonds and capital-protection mechanisms in order to secure the payout in nominal terms. During periods of low interest rates, this left many older contracts with effectively zero return once all product costs were deducted. The reform dissolves this constraint by decoupling state support from the obligation to guarantee capital. Investors now decide for themselves how much risk to take on. A reduced guarantee of 80 percent, or forgoing one altogether, allows for a permanently higher equity allocation, so the overall capital benefits more from market opportunities. (Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.)

With this three-way split, the legislator is backing individual financial responsibility: anyone who forgoes a guarantee accepts short-term market fluctuations, but secures the highest long-term earnings potential for retirement.

Three options at a glance: 0 percent, 80 percent and 100 percent guarantee

With the reform of private pension provision, savers will have three legally defined guarantee levels to choose from starting in 2027: 0 percent (no guarantee)^[3], 80 percent and 100 percent. The statutory contribution guarantee always refers to the sum of the personal contributions paid in plus the state allowances received, as measured at the start of the payout phase. While guarantee products work with 80 or 100 percent capital protection, the pure Altersvorsorgedepot dispenses with a contribution guarantee entirely in order to capture the capital market's maximum return potential.

Comparing the guarantee levels in the new subsidy system

The fundamental difference lies in the trade-off between security and return. With a 100 percent contribution guarantee, providers must shift substantial portions of the capital into interest-bearing but low-yield securities to honour the guarantee at all times. Lowering it to 80 percent noticeably eases this constraint and allows for a higher real-asset allocation. Anyone who forgoes a contribution guarantee altogether opts for the pure Altersvorsorgedepot. Here, the chosen savings contribution flows directly into broadly diversified asset classes such as global ETFs, without any guarantee-related reallocation mechanisms.

This three-way structure fundamentally sets the new system apart from the previous Riester-Rente, which always mandated a rigid full guarantee. Which path is right for you depends on your personal risk tolerance and your remaining savings horizon. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

The 0 percent option: maximum equity allocation and long-term return potential

The variant without a contribution guarantee (the 0 percent guarantee) marks the central turning point of the reform of private pension provision from 2027^[5]. Because the legislator no longer requires mandatory protection of the capital paid in, providers are no longer forced to park substantial funds in interest-bearing but low-yield reserve funds. Instead, the guarantee-free Altersvorsorgedepot allows an unrestricted equity allocation of up to 100 percent. For you as a saver, this means direct market access to broadly diversified ETFs and index funds, letting you make full use of the compounding effect over long periods.

Smoothing out price fluctuations over long savings periods

The absence of a contribution guarantee calls for a transparent assessment of your own investment horizon. A portfolio without a contribution guarantee is exposed to short-term value fluctuations on the capital markets, but according to historical market data, these risks smooth out substantially over savings periods of at least 15 to 20 years. Regular monthly contributions also let you benefit from the cost-averaging effect: during market-wide corrections, you automatically buy more fund units for the same amount, which can have a positive effect on long-term returns. Anyone with 15 years or more left before retirement can accept temporary paper losses in exchange for building a higher final capital sum (not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.).

• Investment horizon: optimal for savers with at least 15 years of savings time remaining before retirement begins.
• Equity allocation: full flexibility to use up to 100 percent equity ETFs and global index funds.
• Cost efficiency: avoids fee-intensive protection instruments and providers' complex capital-protection models.
• Expected return: historically superior earnings potential compared with conservatively protected guarantee products.

For security-oriented investors whose remaining term is under 10 to 15 years, or who want to avoid short-term paper losses, forgoing a guarantee needs to be weighed up individually. In such cases, we recommend a structured assessment of your personal risk tolerance to determine whether a partial guarantee level of 80 percent, or a step-by-step reduction of risk ahead of retirement, is the more suitable solution.

The 80 percent guarantee: the middle path between security and growth

In the new subsidy system from 2027, the reduced 80 percent contribution guarantee represents the middle path between the classic full-guarantee model and an unsubsidised securities account^[6]. With this variant, the product provider guarantees that at least 80 percent of the contributions paid in will be available for retirement at the start of the payout phase. Because the provider only has to protect 80 rather than 100 percent, considerably more room remains for higher-yielding real assets such as equities and ETFs. This noticeably raises the long-term earnings potential compared with older Riester contracts, without investors taking on unlimited downside risk.

How the 80 percent guarantee level works, and its advantages

Lowering the guarantee level reduces the actuarial pressure on the provider to redirect contributions into interest-bearing, low-yield reserve funds. Instead, a considerably higher share of the savings amount can stay invested in the global equity market throughout the savings phase. If you are weighing up whether to give up an existing Riester guarantee as part of the reform or opt for partial protection instead, the 80 percent level offers a calculable foundation.

• Guaranteed minimum payout: at retirement, at least 80 percent of the funds paid in are contractually secured and available.
• Higher equity share: the reduced guarantee requirement allows providers to structure the portfolio more flexibly and with a stronger return focus.
• Protection over a mid-length remaining term: ideally suited to security-oriented savers with an investment horizon of roughly 10 to 15 years.

For security-oriented savers with a mid-length remaining term before retirement, the 80 percent guarantee proves to be a rational compromise. While the guarantee-free Altersvorsorgedepot offers return advantages over savings periods of more than 20 years, the partial guarantee protects against unexpected market slumps shortly before retirement over shorter periods. We recommend always aligning the choice of guarantee level with your personal risk tolerance and remaining time horizon. Please note that all model calculations are illustrative and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

The 100 percent guarantee: maximum nominal security, and its mathematical price

A 100 percent contribution guarantee legally guarantees that, at the start of the payout phase, at least the full sum of the personal contributions paid in plus the state allowances received will be available. What looks at first glance like uncompromising protection ties product providers to strict actuarial requirements. To secure nominal capital preservation under all market conditions, providers must invest a predominant share of the savings contributions in low-risk reserve assets, government bonds or fixed-income securities^[7].

The mathematical effect of the full-guarantee straitjacket

This reallocation mechanism does protect the savings from nominal losses in value, but at the same time significantly limits the return potential on the equity market. During periods of falling prices, dynamic capital-protection systems shift capital out of high-yield equity funds and into the protected reserve fund. When markets subsequently recover, the money often stays in the low-risk segment, so savers no longer fully benefit from the recovery. Over long savings periods, this conservative investment straitjacket leads to a measurable reduction in the effective final return.

• Nominal capital preservation: full preservation of all contributions paid in and state subsidies received, as of the contractually agreed start of retirement.
• Higher purchasing-power risk: despite nominal security, inflation erodes the real purchasing power of the guaranteed capital over the decades.
• Limited return dynamics: heavy exposure to fixed-income assets prevents the continuous use of compounding effects from international equity ETFs.
• Automatic de-risking: algorithms force reallocations into fixed-income securities as soon as market fluctuations put the guarantee commitment at risk.

Choosing a 100 percent guarantee is therefore a fundamental trade-off: investors exchange volatility for expected return. For security-oriented people close to retirement, this option can offer a sensible wrapper. But anyone with a very long investment horizon pays a high price for full nominal security, in the form of forgone market gains. On our knowledge section, we analyse these mathematical relationships neutrally and transparently. Anyone considering giving up an existing guarantee will find further guidance in our Riester guarantee guide. Model calculations and return comparisons serve purely illustrative purposes (not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.).

The return effect: how guarantee costs reduce the final payout

Contribution guarantees provide nominal protection but cause noticeable return trade-offs over long savings periods. To secure an 80 or 100 percent guarantee, product providers must use mathematical capital-protection procedures. When prices fall on the financial markets, these models automatically shift capital out of equity ETFs and into low-volatility but low-yield bonds. When markets subsequently recover, the protected portion stays in the low-risk component, so the account no longer fully participates in the price gains. This reallocation mechanism can substantially reduce long-term return potential.

Besides the opportunity cost of forgone market gains, guarantee products also carry hidden and explicit costs. For the statutory default product, the average annual reduction in return from effective costs is capped at 1.0 percent^[8], but even a seemingly small annual difference in cost or return compounds over the decades into a substantial amount in the final capital. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

• 100% contribution guarantee: maximum protection of personal contributions and allowances, but a very low equity allocation and a high risk of premature reallocation during market slumps.
• 80% contribution guarantee: somewhat more room for higher-opportunity investments, though the remaining guarantee costs still dampen the compounding effect compared with unsubsidised or guarantee-free accounts.
• 0% contribution guarantee (Altersvorsorgedepot): full participation in the global capital market with no capital-protection costs; market fluctuations have to be ridden out over the course of the savings phase.

Choosing the right guarantee level therefore requires an objective trade-off between your personal need for security and the additional retirement income you're aiming for. With a savings horizon of 15 years or more, a high contribution guarantee generally comes at a measurable price in expected return.

Decision aid: which type of guarantee fits your life situation?

Choosing the optimal guarantee level in the new subsidy system requires a neutral trade-off between the desired preservation of capital and the return potential needed for building wealth. Which type of guarantee — 0 percent, 80 percent or 100 percent — fits your situation can be determined systematically using three key criteria: savings horizon, personal risk tolerance and overall investment strategy.

The three decision criteria at a glance

• Savings horizon as the primary factor: with a remaining term of under 10 years until retirement, capital preservation is the priority. A 100 percent contribution guarantee protects the capital paid in from late market slumps. With a horizon of 10 to 20 years, an 80 percent guarantee allows for a higher equity allocation while still providing basic protection. With a term of more than 20 years, the subsidised variant without a guarantee is mathematically superior, since price fluctuations can historically be reliably ridden out.
• Personal risk tolerance and financial resilience: anyone who becomes anxious at interim paper losses of 20 percent or more, or is prone to hasty sales, benefits psychologically from a contribution guarantee. Anyone who can accept fluctuations as a normal part of the market should make use of the higher expected return of guarantee-free portfolios.
• Overall investment strategy and existing assets: don't consider your Altersvorsorgedepot in isolation. If you already have low-risk real assets, property, or entitlements from the statutory pension insurance, your subsidised account can handle a higher equity allocation without a guarantee. If the account instead serves as your primary building block, a partial guarantee can provide stability.

Your decision doesn't have to be final — it should fit your current stage of life. Through the knowledge section, we provide you with well-founded guides, while our Förderrechner Altersvorsorgedepot (subsidy calculator) works out the concrete effects of different scenarios. If you want to clarify whether you should give up an old contribution guarantee when switching, or how to choose the right provider, our Unabhängige Beratungsvermittlung (independent advice service) can help you free of charge. (Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.)

Next steps: how to set your guarantee level on a well-founded basis

The decision for or against a contribution guarantee — 0 percent, 80 percent or 100 percent — lays the groundwork for your later retirement provision. While full preservation of the contributions paid in creates a strong sense of security, it noticeably limits your scope to invest in high-return asset classes such as global equity ETFs. From 2027, the Federal Ministry of Finance (BMF)'s subsidy reform creates the option to choose specifically between guarantee-free Altersvorsorgedepots and more classic guarantee products^[8]. To work out which variant fits your age, your risk tolerance and your savings goals, the following three-step process guides you to a clear decision.

1. Calculate scenarios and final capital: use the Förderrechner Altersvorsorgedepot to simulate the effect of a 0%, 80% and 100% contribution guarantee on your possible final capital. The calculator takes into account your monthly personal contributions, the state allowances you're entitled to, and the respective effective costs of each guarantee level.
2. Deepen your background knowledge from sourced material: use the knowledge section to inform yourself comprehensively about the legal framework, the tax rules during the savings phase, and exactly how the subsidised account variants work.
3. Choose the right implementation path: weigh up whether, as a structured self-directed investor, you want to invest directly through a neobroker account, or whether, for weighing up complex guarantee questions, you'd rather use the Unabhängige Beratungsvermittlung to discuss your personal situation with a neutral adviser.

Both independent digital implementation and personal advice are equally valid ways to make the best use of the new subsidy system for your own retirement provision. Which model suits you primarily depends on how much you prefer to manage your own financial planning. (Note: all calculations and model calculations are non-binding illustrative examples provided for general information. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.)