Is the Riester-Rente being abolished?

Tilman Freyenhagen

Published on 24 July 2026 · Managing Director & Partner, Alsterspree Verlag GmbH

No, the Riester-Rente is not being completely abolished

The short answer is: no, the Riester-Rente is not being abolished retroactively. From 1 January 2027, the system simply closes to new entrants, as the legislator establishes the newly structured Altersvorsorgedepot as its successor. For existing contracts, by contrast, unrestricted statutory protection for existing contracts applies. If you already hold a contract, it continues unchanged, and you keep receiving your state allowances and tax benefits as before.

• Statutory protection for existing contracts: all contracts taken out by 31 December 2026 keep their full validity, guaranteed benefits and previous subsidy structure.
• Stop on new business: from 1 January 2027, providers may no longer sell or take out new Riester-Rente contracts.
• Choice for existing holders: you can continue your old contract unchanged, pause contributions, or switch to the new system if you wish.
• Preserved contribution guarantees: the contribution guarantees promised in the old contract remain fully in place as long as it continues normally.

The reform of private retirement provision is intended, above all, to offer more alternatives and higher return potential. For existing Riester-Rente contracts, this creates no automatic pressure to act. You do not have to cancel contracts hastily, nor are you required to switch. Instead, the legislator creates freedom of choice: you can weigh up whether your existing contribution guarantee suits your safety preference, or whether switching brings advantages. Through our knowledge section we offer you objective, transparent guidance on this.

In summary, the reform is designed as an orderly transition. No existing saver loses their accrued entitlements or previous subsidy benefits because new business is discontinued. Which step is right for your personal provision can be determined soundly based on factors such as remaining term, contract costs and your individual risk appetite.

Statutory protection for existing contracts: what happens to old contracts?

For all contracts taken out by 31 December 2026, unrestricted statutory protection for existing contracts applies. The introduction of the Altersvorsorgereformgesetz (Retirement Provision Reform Act) does not lead to a retroactive devaluation or automatic dissolution of existing contracts. If you are already paying into a Riester-Rente contract, it continues from 1 January 2027 without interruption, on the agreed terms. The legislator mandates neither cancellation nor transfer.

Guarantees, allowances and taxes for existing contracts

The legal basis ensures that essential features of the previous system are preserved. In particular, the contribution guarantees promised under contract remain binding on product providers. Your entitlement to the previous state allowances and the tax treatment also do not change for existing contracts without your explicit consent.

• Contractual contribution guarantee: the guarantee agreed in the old contract on the own contributions and allowances paid in remains legally binding until the agreed start of the pension.
• Previous allowance system: you continue to receive the classic Grundzulage (the basic state allowance) of up to 175 euros a year, as well as the Kinderzulage (the child allowance) (up to 300 euros per child entitled to the allowance), as long as the subsidy method continues unchanged.
• Sonderausgabenabzug (deduction as a special expense): own contributions can, as before, be claimed as an income-tax deduction up to the maximum amount of 2,100 euros per calendar year.
• Payout options: the rules on annuitisation and on a partial lump-sum payout of up to 30 percent at retirement remain in place.

Holders of existing contracts consequently face no automatic need to act. We recommend analysing existing contracts calmly for now. You can keep paying into your contract unchanged, pause contributions if needed, or check at a later point whether switching to the state-subsidised Altersvorsorgedepot makes economic sense.

The Altersvorsorgedepot as the state-subsidised successor

The Riester-Rente is by no means being scrapped without replacement — rather, it stops issuing new contracts on 1 January 2027 and is superseded by the Altersvorsorgedepot. The legal basis for this shift is the Altersvorsorgereformgesetz (AVRG, the Retirement Provision Reform Act), which fundamentally modernises subsidised private provision in Germany. While old contracts carry unlimited protection for existing contracts, the account will in future serve as the central, state-subsidised standard product for building private wealth.

The core of the reform is the move away from the previously mandatory hundred-percent contribution guarantee, which severely hampered the Riester system over past decades. This guarantee forced product providers to shift large shares of the capital into low-yield, supposedly safe securities, so that especially during periods of low interest rates, barely any meaningful returns could be achieved. By contrast, the new account system consistently relies on the capital market and allows direct investment in global equity ETFs and investment funds, to make optimal use of the compound-interest effect over long holding periods.

• Statutory market launch on 1 January 2027: from this date, the legislator closes the market to new Riester-Rente contracts; the Altersvorsorgedepot takes over the role of state-subsidised provision.
• End of rigid guarantee requirements: because the statutory guarantee obligation is lifted, a significantly larger share of your savings contribution flows into higher-return real assets.
• Realigned subsidy logic: the allowances and tax benefits are simplified, made more transparent, and tied directly to your individual own contributions.
• High flexibility in saving: savers benefit from adjustable savings rates, simplified provider switching, and a broad choice of low-cost securities accounts.

By introducing the successor model, the legislator responds to persistent criticism of the classic Riester-Rente's profitability. The Altersvorsorgedepot combines state subsidy with the return potential of the capital market, offering an attractive alternative especially for younger generations and return-oriented savers. Anyone already paying into a Riester-Rente contract does not have to act hastily, but can use the new framework to review their own retirement strategy neutrally, backed by BMF sources.

Option 1: continue an existing Riester-Rente contract unchanged

The new statutory rules make clear that unrestricted protection for existing contracts applies to existing Riester-Rente contracts^[2]. Anyone who took out a contract before 1 January 2027 can keep paying into it as before, make monthly own contributions, and claim the previous state allowances and the Sonderausgabenabzug (deduction as a special expense) in full. All contribution guarantees promised under contract remain untouched.

When continuing to pay in makes economic sense

Continuing an existing contract differs clearly from transferring it or pausing contributions. In our analysis, we identify two core scenarios in which continuing unchanged is the most stable option: contracts with a short remaining term shortly before retirement, and contracts with a high Kinderzulage (child allowance) ratio relative to the own contribution.

• Short remaining term to retirement: if only a few years remain until retirement, the remaining investment horizon is usually not enough to offset any switching costs through more profitable capital-market investments.
• High child-allowance ratio: families with several children receive substantial allowances under the previous system relative to the required own contribution, so the subsidy rate stays exceptionally attractive.
• Preserving the full contribution guarantee: for existing contracts, the provider guarantees 100 percent of the capital paid in, giving safety-conscious savers maximum predictability.
• Avoiding switching costs: keeping the old contract incurs no additional switching, arrangement or cancellation fees.

If you're unsure whether your personal allowance structure or remaining term favours keeping your contract, our subsidy calculator helps with a mathematically precise comparison. On this basis, you can decide soundly whether to continue your old contract unchanged or consider making a change.

Option 2: pausing contributions to a Riester-Rente contract

For savers whose existing Riester-Rente contract carries high costs or delivers a low return, the Beitragsfreistellung (contribution pause, also called Ruhendstellung) is a useful interim solution. Anyone who wants to put their Riester-Rente contract on hold stops all future own contributions without formally cancelling the contract. The capital saved so far then stays in the contract, continues to accrue interest on the agreed terms, and remains fully protected by the statutory protection for existing contracts. The decisive advantage: there is no harmful use of the funds, so state allowances and tax benefits already received do not have to be repaid to the tax authorities.

• Stop to own contributions: you stop paying any further monthly contributions, easing your monthly cash flow.
• Preserved subsidies: all Grundzulage and Kinderzulage payments and tax benefits received up to the point of pausing remain untouched.
• Reduced cost burden: arrangement and distribution costs on new contributions are eliminated entirely. Only the contractually agreed administration costs on the existing capital continue to apply.
• Switching option stays open: the accumulated balance can be transferred into the new Altersvorsorgedepot once it launches in 2027.

Pausing contributions is particularly suited as a strategic bridge until the Altersvorsorgedepot launches on 1 January 2027. Rather than continuing to pay capital into an opaque or fee-heavy product, you freeze the status quo. The assets you've built up so far keep accruing interest under statutory protection, while from 2027 you can direct your savings rate specifically into state-subsidised, higher-return investment forms such as ETF savings plans in the Altersvorsorgedepot.

Bear in mind, though, that ongoing administration fees can still reduce the existing balance even on a paused contract. It is therefore advisable to check the exact contract terms and fee structure in your annual account statement, to work out whether pausing contributions or a later capital transfer is the more economically sensible option for your retirement provision.

Option 3: switching and transferring your balance into the Altersvorsorgedepot

Besides continuing or pausing an existing Riester-Rente contract, the reform offers a third option from 1 January 2027: switching completely into the new Altersvorsorgedepot. The Altersvorsorgereformgesetz provides that you can transfer your accumulated Riester capital directly into a subsequent Altersvorsorgedepot^[3]. The decisive advantage of this regulated capital transfer lies in the protection of your existing balance. As long as the switch is carried out through the statutory transfer procedure, all state allowances and tax benefits granted in the past remain fully preserved, and no subsidy-damaging settlement takes place.

The key rules for the transfer at a glance

• Subsidy preserved: with a properly executed transfer of the capital, all state allowances and tax benefits received so far remain within your retirement assets.
• Cost structure when switching provider: your existing provider may charge switching or closing fees for processing the capital transfer. We therefore recommend checking your old provider's contract terms in advance, to avoid unexpected switching costs.
• No double subsidy: transferred capital that was already subsidised by the state in earlier years does not trigger a new state allowance in the year of transfer. You receive new allowances only on fresh own contributions you pay in during the current contribution year.
• Free choice of target product: when applying for the transfer, you decide for yourself whether to move your existing assets into a return-oriented Altersvorsorgedepot without a contribution guarantee, or into a new guarantee product.

For many investors, switching from Riester is worth considering in particular when the remaining term to retirement is still long enough to benefit from the account's higher equity and ETF allocation. Since switching fees can reduce the effective return, the exact transfer amount should be calculated carefully. Note: all calculations and comparisons are for orientation purposes only and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Subsidy comparison: old Riester allowances versus the new AVD subsidy

The reform of private retirement provision brings a fundamental change to how the state subsidy is structured. While the previous Riester model was based on a complex formula tied to 4 percent of the previous year's income subject to social security contributions, the Altersvorsorgedepot, applying from 2027, uses a direct matching subsidy. In future, the subsidy will no longer be based primarily on income, but transparently on your actual own contributions. Anyone wanting to analyse how the difference between Riester and the AVD is structured will recognise the key simplification here: the state rewards every euro you invest, directly.

Under the new allowance system, the maximum basic subsidy for savers rises to up to 540 euros when the maximum own contribution of 1,800 euros is used in full. For families with children, the incentive stays high: for every euro of own contribution, the state adds one euro to the Kinderzulage, capped at a maximum of 300 euros per child. This percentage-based logic markedly increases transparency and rewards consistent saving without bureaucratic hurdles.

For the exact tax treatment, the Finanzamt (tax office) continues to check, as part of the Günstigerprüfung (more-favourable-terms test), whether the Sonderausgabenabzug brings an additional tax benefit. How the Altersvorsorgedepot is tax-subsidised can therefore be calculated reliably. The subsidy calculator lets you work out your individual subsidy rate in just a few clicks. (Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.)

Decision guide: how to find the right path for your provision

Because existing Riester-Rente contracts enjoy statutory protection for existing contracts and do not end automatically, the reform of private retirement provision requires no hasty action^[3]. A premature cancellation often results in the loss of state allowances already granted and can trigger harmful back-tax payments. Which path is individually the most economically sound depends on several personal factors. Before making a decision, you should analyse your existing Riester-Rente contract against objectively measurable criteria.

• Remaining term to the start of your pension: with a remaining accumulation phase of under ten years, the advantage of the guaranteed minimum benefit in the old contract often outweighs the alternative. With longer terms of 15 years or more, the stronger equity orientation of the Altersvorsorgedepot can open up higher return potential.
• Cost structure of the old contract: high effective costs and ongoing administration costs significantly reduce the return on many old contracts. A precise review of the annual cost ratio reveals potential savings.
• Allowances and subsidy accrued so far: anyone who has built up substantial Grundzulage and Kinderzulage payments over the years must make sure the subsidised retirement assets are continued or transferred without losing out on allowances.
• Personal risk profile: while the classic Riester-Rente mandates a full contribution guarantee, the Altersvorsorgedepot allows a more flexible split between guarantee products and return-oriented investment funds.

A systematic comparison of these factors prevents rash steps and creates a solid basis for further planning. Whether you make your switching decision on your own or prefer personal advice, a neutral, transparently prepared review helps you keep using the state subsidy optimally for building your wealth going forward.