30 percent in one go: the lump-sum withdrawal from the AVD

Tilman Freyenhagen

Published on 25 July 2026 · Managing Director & Partner, Alsterspree Verlag GmbH

The 30 percent rule for the Altersvorsorgedepot at a glance

Yes, at the start of the payout phase you can have up to 30 percent of the total capital saved in the Altersvorsorgedepot paid out in one go as a lump sum^[1]. This so-called partial capital withdrawal is expressly defined as not jeopardising the subsidy. That means: all the state allowances and tax benefits granted during the savings phase remain yours in full, and, unlike a detrimental early termination, do not have to be repaid to the state.

Legal basis, and the distinction from a detrimental withdrawal

The legislator draws a strict distinction between a non-detrimental partial capitalisation at retirement and an early termination of the contract. If you withdraw capital or terminate the contract before the agreed start of the payout phase, this counts as a detrimental use, which triggers repayment of the subsidy. With the 30 percent rule at the start of the payout phase, however, the state deliberately waives any restriction on use. You can therefore use the lump sum paid out completely freely — for example, to renovate a property, take a major trip, or as a financial cushion when entering retirement. Comparing different payout options shows that this rule offers maximum flexibility.

The remaining at least 70 percent of your accumulated assets stays in the product and is paid out through a long-running drawdown plan or a lifelong pension payment. This combination of a lump sum and a steady income stream ensures that flexibility is preserved at retirement, while long-term financial security in old age is guaranteed at the same time.

Requirements and timing for the lump-sum withdrawal

A partial capital withdrawal of up to 30 percent of the accumulated account assets is strictly tied by law to the official start of the payout phase. Under the requirements of the Federal Ministry of Finance (BMF), this lump-sum withdrawal is available to all savers without jeopardising the subsidy and without having to prove any particular use. The regular point in time for the start of the payout phase is the completed age of 65. If you already draw a statutory old-age pension early, the start of the payout phase can be brought forward accordingly. A withdrawal before reaching the age threshold, or without the pension case having occurred, on the other hand counts as a detrimental use and leads to a clawback of the state allowances and tax benefits granted.

Formal criteria and application deadlines at a glance

• Reaching the age threshold: the lump-sum withdrawal requires reaching age 65, or proof of the start of the statutory pension.
• A one-off payout point: the partial capital withdrawal of a maximum of 30 percent is permitted exclusively at the start of the payout phase. Once ongoing payouts have begun, a later withdrawal is excluded.
• No restriction on use: unlike the home-ownership withdrawal, the liquid funds from the 30 percent withdrawal are at your free disposal.
• Meeting formal deadlines: the request for payout must be submitted in writing to the institution holding the account, as a rule at least three to six months before the start of the payout.

To avoid administrative delays, savers should plan the withdrawal of the partial capital early and check their provider's specific processes. Anyone who wants to use this option sets out bindingly in the application which percentage share (up to a maximum of 30 percent) should be transferred to their current account. The remaining capital then forms the basis for the drawdown plan or a lifelong pension. For savers approaching retirement, careful timing is essential, since the choice of timing has a direct effect on liquidity and on the tax assessment for the relevant calendar year. A structured look at the contractual start of payout helps with optimal planning.

Tax treatment of the lump-sum payment in the payout year

If the 30 percent lump-sum withdrawal option is used at the start of the payout phase, the amount paid out is subject to full taxation in the year it is received. The legal basis for this is deferred taxation under § 22 Nr. 5 Einkommensteuergesetz (EStG). Because the capital gains and subsidised contributions remained tax-free during the savings phase, the lump-sum payment is taxed at your personal income tax rate in the calendar year it is paid out.

The progression effect and the principle of receipt

Because of the German income tax schedule, a large lump-sum payment can produce a noticeable progression effect. If a substantial sum is received in one go, it drastically increases your taxable income in the payout year. Even if your other income in retirement is lower than during your working life, the lump-sum payment can push up your marginal tax rate for that specific year. We therefore recommend precisely coordinating the exact timing of your retirement and any other income in the same calendar year.

Differentiation by type of contribution

• Subsidised contribution shares and allowances: payouts based on state-subsidised personal contributions (up to the maximum amount of 1,800 euros per year) and the allowances received are taxed in full as other income under § 22 Nr. 5 EStG.
• Unsubsidised personal contributions: if you have paid in contributions above the subsidy ceilings, or without any entitlement to allowances, only the returns attributable to them are taxed, while the capital you paid in is paid out tax-free.
• Withholding and assessment: the lump sum is recorded as part of the income tax return for the payout year and assessed at your individual tax rate.

Ways to reduce the tax burden on the withdrawal

Because the payout of up to 30 percent of the account capital at retirement must be taxed in full as income under deferred taxation^[2], a substantial progression spike often results. The one-off capital withdrawal is added to your other taxable income in the payout year. Without structured planning, there is a risk of an unnecessarily high personal marginal tax rate. Various checkpoints and structuring options are available to savers approaching retirement to optimise this tax burden.

Three checkpoints for reducing the progression

In practice, the timing relative to the end of your working life is decisive. If, for example, you leave your job midway through the year, the lump-sum payment increases the taxable income for the remaining working months. If, on the other hand, you defer the withdrawal of the partial capital to the start of the following year, only the statutory pension and other retirement income form the tax assessment base. Anyone who wants to simulate the exact effects for their individual portfolio can use our tax comparison or consult a specialist. Please note: financial-mathematical illustrations serve as orientation and do not constitute investment or tax advice.

Effects of the partial capitalisation on the remaining account capital

If you opt for the tax-permitted partial capital withdrawal of up to 30 percent at the start of the payout phase, the financial base for your ongoing retirement provision is immediately reduced to the remaining 70 percent of the account assets. This capital withdrawal shrinks the base for the subsequent drawdown plan or annuitisation and proportionally reduces future earnings potential in the account too. Anyone who chooses flexible liquidity at the start of retirement is thereby trading a higher monthly retirement income for an immediately available capital cushion. We therefore recommend carefully weighing up the various payout options against each other before deciding.

Worked example: the reduction in capital

The model calculation illustrates the direct financial consequences: withdrawing 45,000 euros reduces the remaining account balance from 150,000 euros to 105,000 euros. Under a simplified assumption of a 20-year payout period, the monthly gross payout therefore falls from around 625 euros to approximately 437 euros. This corresponds to a permanent reduction in the monthly payout rate of exactly 30 percent, or 188 euros per month. *Note: this model calculation serves purely to illustrate the proportionality mathematically and does not take into account individual tax deductions or account returns during the payout phase. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG^[3].

Structuring the remaining 70 percent of the balance

If you opt for the one-off partial capital withdrawal of up to 30 percent at the start of the payout phase, at least 70 percent of your subsidised assets remains in the Altersvorsorgedepot. This main portion of the capital is legally earmarked for ongoing retirement provision. The legislator ensures that these assets are distributed in a structured and reliable way over the course of retirement. Flexible payout options are available to you for making use of the remaining balance, which can be adapted to your personal life plans.

Benefit forms and the distribution of monthly instalments

For making use of the remaining 70 percent of the account balance, the reform of private pension provision sets out clear rules^[4]:

• Long-running drawdown plan: the remaining capital is paid out in monthly instalments, with the drawdown plan required to run at least until the completed age of 85. A longer term is contractually possible.
• Option for a lifelong annuitisation: from age 85, you can convert the remaining capital, or a remaining portion of it, into a lifelong life annuity through an insurer, to fully hedge the longevity risk.
• Flexibility in the monthly instalments: within the legal requirements, the distribution of the instalments can be adjusted. For example, higher monthly withdrawals can be agreed for the first phase of retirement than in later years.

These structuring options give you a high degree of flexibility in distributing your assets in old age. As with the lump-sum payment, all ongoing monthly instalments are also subject to deferred taxation at your individual income tax rate.

Typical pitfalls and example scenarios for the lump-sum withdrawal

The statutory rule allows you to withdraw up to 30 percent of the capital built up in the Altersvorsorgedepot as a lump sum at the start of the payout phase, without the state subsidy being put at risk. Whether this step makes financial sense, however, depends heavily on your individual life and tax situation at the start of retirement. While the lump-sum payment creates immediate liquidity, it simultaneously reduces the remaining capital and therefore the monthly instalments in the subsequent drawdown plan or life annuity.

• Paying down property debt or renovation: if, at the start of retirement, you pay off the remaining debt on an owner-occupied property or fund energy-efficiency renovations, the capital withdrawal can save substantial interest costs. In practice, the interest-saving effect of paying off debt often offsets the reduction in the ongoing retirement pension.
• Tax progression while still working: if you still receive salary or income from part-time work at the start of the payout phase, the 30 percent withdrawal lands on top of an already high marginal tax rate. Because the sum is taxed in full as other income in the payout year, this can lead to an exceptionally high tax burden.
• Longevity risk and a protection gap: reduced remaining capital leads to noticeably lower monthly payouts over a remaining term of 20 to 25 years. If you lack other guaranteed sources of income, the lump-sum withdrawal increases the risk of facing financial shortfalls later in life.

For savers approaching retirement, we therefore recommend a careful comparison of liquidity needs against the ongoing level of pension, in the context of the other payout options. Deferring the withdrawal to a year with lower total income can noticeably reduce the tax burden. Please note: all model calculations and scenarios serve purely for general orientation. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Decision aid: when does the 30 percent withdrawal make sense?

For savers approaching retirement, the question shortly before the transition into retirement is whether exercising the 30 percent capital option makes economic sense. By law, a one-off partial capital withdrawal of up to 30 percent of the subsidised capital is permitted at the start of the payout phase, with no restriction on use^[7]. The decision, however, directly affects the amount of the remaining monthly pension payments as well as your personal tax burden. Under deferred taxation, the lump sum is counted in full as income in the year of withdrawal, which can lead to a temporary increase in your tax rate.

A checklist for your personal assessment

• Analyse tax progression: check to what extent the lump-sum payment increases your taxable income in the year of withdrawal, and whether deferring the timing would be advantageous.
• Weigh up the intended use and alternative income: a withdrawal makes strategic sense for paying down property debt or where there is a concrete investment need, less so simply for moving funds into non-interest-bearing accounts.
• Securing ongoing liquidity: the remaining 70 percent must be sufficient to cover the standard of living you want through a long-running drawdown plan or a life annuity.
• Prepare documents for the account provider: gather the current account balance, the allowance history, and the confirmation of the agreed retirement start age.

Whether you set your payout structure yourself or prefer individual guidance depends on your personal prior experience and the complexity of your tax situation. We support you either way: through our knowledge section, you get sourced guides for independent preparation. If digital research on its own isn't enough for you, we connect you with licensed experts for a personal simulation through our Unabhängige Beratungsvermittlung (independent advice service). All model calculations serve for illustration (not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.).