AVD subsidy for families: a worked example

Tilman Freyenhagen

Published on 15 June 2026 · Updated on 7 August 2026 · Managing Director & Partner, Alsterspree Verlag GmbH

The system change from 2027: more return for families

From 2027, families with children receive a particularly high state subsidy under the new Altersvorsorgedepot, made up of a tiered Grundzulage of up to 540 euros and a Kinderzulage of up to 300 euros per child^[1]. Through this combination, parents often achieve subsidy rates of over 80 percent on their own contributions. With the adopted law reforming private pension provision, whose subsidies start in 2027, the federal government is carrying out a fundamental system change, with the focus shifting to genuine return potential in the equity market^[6].

The decisive advantage of this new Altersvorsorgedepot over the classic Riester-Rente (Germany's existing subsidised private pension) is that the rigid guarantee requirement falls away. Until now, providers had to guarantee 100 percent of the contributions paid in, which ruled out higher-earning investments. Going forward, state allowances and your own contributions can flow directly into low-cost ETFs. The Grundzulage is 50 percent on the first 360 euros and 25 percent on further contributions up to 1,800 euros. On top of that comes a Kinderzulage of 100 percent on your own contributions, up to 300 euros per child.

This worked example illustrates the substantial leverage for families. A significant share of the overall retirement provision is built directly from state contributions. To work out your individual entitlement precisely, our subsidy calculator is available to you. Note: the worked example shown is intended solely to illustrate the statutory subsidy structure. It is an illustrative presentation and not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Allowances in detail: the basic subsidy and child contributions explained clearly

The state subsidy for the new Altersvorsorgedepot from 2027 is a powerful lever for long-term wealth-building. The centrepiece of the reform is the two-tier Grundzulage: the state matches your contributions at a rate of 50 percent on the first 360 euros of your annual own contribution. For every euro beyond that, the allowance is 25 percent, until the maximum Grundzulage of 540 euros is reached at an annual contribution of 1,800 euros^[2]. This reliable structure noticeably eases the burden on savers, since a substantial share of the savings contribution is covered directly by the state.

The leverage effect of the Kinderzulage under 1:1 matching

For families, the Altersvorsorgedepot becomes especially attractive thanks to the additional Kinderzulage of up to 300 euros per child per year. This allowance is granted through fair 1:1 matching: for every euro you pay into your account yourself, the state adds one euro of Kinderzulage, until the maximum amount per child is reached^[3]. A family with two children can thus receive up to 600 euros in additional contributions per year, with a matching own contribution. This model ensures that families with middle incomes in particular achieve an exceptionally high subsidy rate. To work out the precise impact for your personal family situation, it's worth taking a look at our subsidy calculator or doing detailed research in our Altersvorsorgedepot guide.

These calculations illustrate the enormous leverage of state contributions for families. Please note that the figures shown are illustrative and based on the statutory framework for 2027. They do not constitute investment advice (not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG).

The Kinderzulage from 2027: maximum contribution for moderate effort

For a family with two children, the new Altersvorsorgedepot from 2027 is one of the most lucrative state-subsidised savings vehicles. By combining the two parents' individual Grundzulagen with the Kinderzulagen, a considerable state subsidy can be achieved with manageable own effort. A concrete, well-sourced worked example shows how families can benefit from extremely high subsidy rates. According to the Bundesfinanzministerium (Federal Ministry of Finance, BMF), the state pays an annual allowance of up to 300 euros directly into the account for every child eligible for Kindergeld (the German child benefit)^[1]. This Kinderzulage is granted at a 1:1 ratio to your own contribution: the maximum state contribution already flows once you pay in 300 euros per child. Compared with the old Riester-Rente, this does away with complicated applications, and payment is straightforward and direct.

To make the leverage of the new subsidy tangible, let's look at a family with two children in which both parents each pay into their own account. If each parent pays in 50 euros a month (that is, 600 euros a year), the result is substantial state support. For calculating individual scenarios, it's worth taking a look at our neutral subsidy calculator, while our knowledge section provides in-depth legal detail.

In this scenario, the family saves a total of 2,280 euros a year, of which the state covers around 47.4 percent, or 1,080 euros. Relative to the own savings contribution of 1,200 euros, this amounts to an exceptionally high subsidy rate of 90 percent. This high level of state subsidy shows how effectively the new model supports families in building long-term wealth. Please note: this worked example is intended solely to illustrate the statutory subsidy rules from 2027 and does not constitute tax or investment advice (not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG).

A concrete worked example: how much a family with two children benefits

For families with two children, the new Altersvorsorgedepot has an enormous leverage effect from 2027. By combining the Grundzulage and the Kinderzulagen, parents can achieve a high state subsidy with a comparatively small own contribution. If, for example, one parent pays an annual own contribution of 360 euros into the account, the state contributes substantial amounts under the subsidy rules. This worked example illustrates how the contributions add up and what leverage this creates for long-term wealth-building.

The calculation shows how effectively state support is designed for families. With an own contribution of 360 euros a year, 180 euros of Grundzulage plus 360 euros of Kinderzulage for two children bring a total of 540 euros in state contributions into the account^[2]. That amounts to a state subsidy rate of 60 percent relative to the total capital of 900 euros invested in the account. Relative to the own savings contribution, the subsidy rate is even higher, at 150 percent, since the state adds one and a half times the own contribution. Note: the Kinderzulage is granted at a 1:1 ratio to the own contribution; the full 300 euros per child is only reached at an own contribution of 300 euros per child. These BMF-compliant subsidy rules ensure that families' investment capital grows noticeably even before the first market return.

Advantages of the account subsidy in everyday family life

Because the Kinderzulage is directly tied to receiving Kindergeld, this state support remains reliably in place throughout your child's entire childhood. All the capital from own contributions and state allowances is invested directly in return-focused ETFs within the Altersvorsorgedepot, to make optimal use of the compounding effect over the decades. For an exact calculation tailored to your personal family situation, you can use the interactive subsidy calculator. The knowledge section offers more in-depth articles and, if needed, points you to an independent advice service. Note: the calculations are illustrative and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

The compounding effect: how state allowances multiply your final capital

Long-term wealth-building for families in the new Altersvorsorgedepot gains enormous leverage from the combination of state contributions and long-term market returns. When allowances flow into low-cost ETFs year after year, a powerful compounding effect emerges. The state subsidy is therefore not just a one-off contribution, but a return accelerator that generates its own interest and compound interest over the decades. As a result, the account grows markedly faster than a purely private savings plan without state backing. A transparent model calculation for a family with two children shows how strong this effect is over a term of, say, 25 years.

This leverage significantly increases the final capital compared with an unsubsidised investment. The allowances of 990 euros a year add up over 25 years to a total state contribution of 24,750 euros. Thanks to the compounding effect, these state subsidy funds alone grow to over 54,000 euros in the capital market, assuming a return of 6 percent a year. To simulate such dynamics for your personal situation in detail, the subsidy calculator is available to you. Alongside calculating contributions, families should also pay attention to low account fees, since high administrative costs can erode the compounding effect over the long term^[4].

Important note: the calculations are for demonstration purposes only and should not be understood as guaranteed outcomes. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Direct comparison: why the Altersvorsorgedepot beats the old Riester contract

For families, the new Altersvorsorgedepot offers substantial financial advantages over conventional Riester contracts, because the complete removal of the rigid statutory contribution guarantees allows for a return-focused investment of up to 100 percent in equity ETFs, while the state allowances remain fully intact. Through this fundamental reform, you can make your retirement provision markedly more profitable over the long term, without giving up the valuable financial support for your children.

The transition from an existing contract is clearly regulated by law and structured to be financially attractive: under the requirements of the Bundesministerium der Finanzen (Federal Ministry of Finance), the switching fees for transferring the accumulated capital are capped at a maximum of 150 euros within the first five years, and switching becomes completely free of charge from the sixth contract year onward^[1]. This statutory cost cap lets you transfer your existing Riester balance into the modern account flexibly and without heavy losses.

The comparison clearly shows why the new account structure outperforms, in almost every respect, the classic Riester safety wrapper, which for decades eroded the returns of many family contracts through high administrative costs and pension guarantees that missed their mark:

If you're unsure whether switching is worthwhile for your family, you can transparently simulate the precise impact with the digital subsidy calculator. For in-depth background on the new statutory subsidy rates, our knowledge section is also available to you as a neutral source of knowledge.

Legal notice: the scenarios and model calculations shown are intended to illustrate the statutory system and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Contribution obligations and flexibility: what happens during parental leave?

Family life rarely runs in a straight line. Periods such as parental leave, career breaks, or a temporary switch to part-time work often bring a marked drop in income. The new Altersvorsorgedepot from 2027 accounts for this reality of life through a high degree of contribution flexibility. If your financial situation changes, you can flexibly adjust, reduce, or temporarily suspend your savings rate at any time, without incurring contractual penalties or additional fees. To keep your claim to the state subsidy and the valuable allowances for yourself and your children, you only need to pay a statutory minimum own contribution of 120 euros per calendar year — that works out to just 10 euros a month — into your account^[5].

This flexible structure helps young mothers and fathers in particular bridge financial gaps during periods of raising children, without having to abandon or cancel the retirement provision they've built up over the long term. Through our knowledge section, you get in-depth, well-sourced insight into the exact statutory framework set by the Bundesministerium für Finanzen (BMF, Federal Ministry of Finance). If you're unsure how different periods of parental leave will specifically affect your later private pension, our digital subsidy calculator can help you with an initial, transparent calculation. For tailored life planning and the best fit with your individual family situation, professional, personal advice can also offer valuable guidance. All calculations and mathematical models in this article are solely for illustration and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

The path to the account: independent advice or a digital self-directed decision

For getting started with the new Altersvorsorgedepot from 2027, families in Germany have two equally valid paths open to them: the digital self-directed route, or independent advice. Which path suits your family best depends on your existing knowledge, your time, and how much individual clarification you need on complex allowance questions. While digitally minded parents often plan the details themselves using online tools, personal guidance offers reliable protection against costly mistakes in long-term provision.

The digital self-directed path suits people who want to manage their finances themselves. Here, you use interactive tools on our portal. With the subsidy calculator, you can work out the individual subsidy entitlement for both parents and your children in detail. After that, the provider comparison tool helps you filter cost-efficient providers such as neobrokers, to optimise your return through low fees.

Those who prefer personal support, on the other hand, choose the path of professional guidance. Through our independent advice service on Vorsorgedepot-Lotse, you get access to licensed experts. They advise you neutrally and individually, to clarify questions about allowance eligibility or the optimal risk profile in a family context. An adviser can also help you determine the precise split of the Kinderzulagen between partners, which, according to the Bundesfinanzministerium's guidelines, can make a substantial financial difference^[1].

Whichever path you choose, the essential steps for optimal subsidy remain the same. First, work out your potential subsidy rate in the knowledge section, set your personal risk profile, and compare account fees. Opening the account then paves the way to making full use of the state allowances from 2027 for your family's long-term wealth-building. Please note: all model calculations and comparisons are solely for illustration and orientation (not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG).