Does the Altersvorsorgedepot actually pay off?

Tilman Freyenhagen

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

1. The core of the reform: what is the Altersvorsorgedepot?

For most savers in Germany, the new Altersvorsorgedepot pays off, because state allowances and tax relief can noticeably raise the long-term net return. Whether the account pays off financially in your own situation depends on individual factors such as your tax rate and remaining term. Use the subsidy calculator to model these effects precisely.

Introduced as part of the private pension reform from 1 January 2027, the Altersvorsorgedepot replaces the previous Riester system for new business^[1]. The new model breaks with old constraints: the previously mandatory but return-damaging 100 percent contribution guarantee is dropped. That lets savers invest their subsidised contributions fully in higher-return asset classes such as ETFs. Taxation of returns is deferred to the payout phase, which allows a substantial compounding effect during the accumulation phase.

• End of the rigid guarantee requirement: providers no longer have to promise a full contribution guarantee, so capital can be invested more profitably in equities and ETFs.
• Flexible product choice: savers can choose from certified fund products and shape their portfolio to their own preferences.
• Tax relief and allowances: contributions can be claimed for tax purposes, topped up by direct state allowances for families and low earners.
• Deferred taxation: gains and dividends stay tax-free during the accumulation phase and are only taxed on payout in retirement.

These fundamental changes make subsidised retirement provision in Germany highly attractive, for the first time, to a broad mass of private investors and the self-employed. If you're looking for well-founded orientation based on verified facts, the knowledge section offers in-depth analysis. For an individual assessment, professional advice is also available, and you can access it without hassle. Please note: model calculations are for illustration and do not constitute investment advice within the meaning of the KWG.

2. State allowances: how to secure the maximum subsidy

The new Altersvorsorgedepot, effective from 1 January 2027, fundamentally reforms state support for private pensions in Germany. In place of the old Riester rules comes a transparent, two-tier allowance system tied directly to your own contributions. To get the maximum Grundzulage of 540 euros a year, you have to make matching contributions of your own over the course of the calendar year, with the state topping up your savings as a percentage. This legal overhaul aims to make state-supported retirement provision more accessible and easier to understand for broad sections of the population^[2].

The basic subsidy mechanism splits into two clearly defined tiers. In the first tier, savers get a particularly attractive subsidy rate of 50 percent on the first 360 euros of their own contributions, equal to an allowance of up to 180 euros. In the second tier, a rate of 25 percent applies to all further payments beyond that. To draw the full Grundzulage of 540 euros, you therefore need an annual own contribution totalling 1,800 euros. In addition, eligible people can claim further allowances such as the Kinderzulage. In our knowledge section, we lay out all the legal framework for you neutrally. To work out precisely how these allowance tiers affect your personal retirement planning, our digital subsidy calculator is available.

Please note that these calculations and projections are illustrative, based on the enacted and promulgated legislation. This information does not constitute investment advice within the meaning of section 1 (1a) no. 1a of the Kreditwesengesetz (Banking Act). For a detailed assessment of your individual situation, alongside the digital tools you can also use our independent advice service to get personal guidance from qualified experts.

3. The tax advantage: how the account pays off during the accumulation phase

Alongside the direct state allowances, the new Altersvorsorgedepot offers substantial tax advantages that can noticeably raise the long-term return. In your income tax return, you can claim your contributions, including the allowances received, as Sonderausgaben (special expenses)^[3]. The tax office automatically runs a so-called Günstigerprüfung (more-favourable-treatment check). If the tax benefit from the special-expenses deduction is higher than the allowance you're entitled to, the tax office refunds the difference directly with your tax assessment. This way, your contributions immediately reduce your taxable income and, at a higher tax rate, lead to a noticeable tax saving.

Another key lever for building wealth is the tax exemption during the decades-long accumulation phase. Unlike a regular, unsubsidised securities account, the Altersvorsorgedepot incurs no annual Vorabpauschale (advance lump-sum tax). What's more, all dividends, distributions and realised price gains stay tax-free when reallocating fund holdings^[3]. That means compounding can work without any tax deduction at all. Every euro of return stays fully in the account and is reinvested directly, which makes a massive difference over a long investment horizon.

This principle matches the tax treatment of traditional pension products, but with the flexibility of an ETF investment. Only in retirement, that is from your 65th birthday, does deferred taxation apply at your personal income tax rate at that time^[3]. To work out precisely how strongly this tax deferral affects your individual case, and what final capital you can expect, we recommend using the digital subsidy calculator tool. Please note that all the tax framework described here follows the enacted legislation and these calculations are purely illustrative. No investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

4. Who does the Altersvorsorgedepot pay off for most?

The economic appeal of the new Altersvorsorgedepot (AVD) depends heavily on your personal life stage, your income and your family situation. Under the enacted Altersvorsorgereformgesetz (pension reform act), this account represents a fundamental modernisation of state-subsidised private retirement provision^[2]. Combining tax relief during the savings phase with direct state allowances can produce a noticeable return advantage over unsubsidised forms of saving, which adds up over the decades of the accumulation period.

The clear winners are therefore young families, who receive substantial, return-boosting state support through their entitlement to the Kinderzulage of up to 300 euros per child^[2]. Career starters under 25 also benefit from a one-off state bonus of 200 euros, invested directly in the account and benefiting from compounding. For self-employed people with no statutory pension insurance obligation, a historic provision gap closes once the scheme starts in 2027, since they get full access to the state subsidy for a market-based, flexible fund investment for the first time.

Whether starting or switching pays off financially for you can't be answered in general terms. Use the subsidy calculator to enter your own data and work out the exact subsidy rate. For a detailed, personal analysis, our independent advice service gives you direct contact with licensed experts. Note: all calculations and models are for illustration only and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

5. When the Altersvorsorgedepot tends not to pay off

Although the state subsidy and tax advantages make the new Altersvorsorgedepot from 2027 an attractive option for many savers, the model isn't the economically best choice for every life situation. In certain scenarios, a traditional, unsubsidised ETF investment or another pension product can be more advantageous^[4]. To make a well-founded decision, you should carefully check the specific exclusion criteria and conditions.

Three key factors can strongly limit, or even wipe out, the subsidy effect of the state-supported account. First, the remaining time to save before retirement plays a decisive role. If your remaining term is less than ten years, the time left is often not enough for the compounding effect of the subsidy to offset the initial entry hurdles and any account fees. Second, excessive distribution or administration fees from providers can largely eat up the state allowances and tax advantages. Third, the Altersvorsorgedepot requires a strict earmarking of funds until the start of the payout phase, which begins at the earliest from your 65th birthday. Anyone who needs full flexibility over the saved capital before that point has to expect to repay the state allowances and tax advantages if they make a withdrawal that breaches the subsidy conditions.

A detailed calculation is the right way to get a reliable, neutral analysis of your personal situation. With the subsidy calculator you can weigh up the potential cost drawbacks against the tax advantages individually, and make a well-founded judgement on whether switching pays off for you. For complex circumstances, the knowledge section or personal, independent advice can also help you avoid costly mistakes (no investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG).

6. The cost brake: why provider fees decide your return

A decisive weak point of conventional Riester insurance policies was the heavy cost burden, which often ate up the state allowances entirely^[4]. Fortunately, stricter statutory requirements apply to the new Altersvorsorgedepot. A statutory cost cap of a maximum 1.0 percent a year applies to certified standard products. But even within that cap, the rule holds: every tenth of a percentage point you save in fees flows straight into your future wealth.

To maximise your actual subsidised return, you should focus on two key cost factors above all: account fees and ongoing fund costs. While expensive, actively managed funds often charge additional front-end loads and high management fees, low-cost, broadly diversified ETFs offer the best combination of low fees and wide risk diversification. Provider transaction costs, such as order fees or trading venue charges, can also add up noticeably with regular savings plans. A careful comparison helps you keep these deductions as low as possible.

A look at real-world practice shows how strongly even minimal fee differences affect your expected final capital. Over a term of 30 or 40 years, seemingly small fee differences quickly add up to five-figure sums that you'll be missing in retirement. So use our subsidy calculator to work out the exact fee impact for your personal situation transparently. If you want to compare different brokers and their terms, our provider comparison helps you find the best and cheapest platform. The knowledge section also offers in-depth information on all the regulatory details of the law.

Please note: all calculations and comparisons shown are for illustration only and do not constitute financial advice within the meaning of the Kreditwesengesetz. (No investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.)

7. Switch from Riester or keep it? A decision guide for existing savers

Switching from an existing Riester contract to the new Altersvorsorgedepot pays off for most savers from 2027, when improved return prospects and lower costs outweigh the old state contribution guarantees. For millions of active contracts, the question is whether to transfer the balance or keep the existing contract running^[3]. A transfer gives you direct access to higher-return equity ETFs and frees you from the rigid terms of traditional insurance products, but it requires giving up existing guarantees.

In your individual assessment, you should check three criteria above all: the value of your old guaranteed interest rate, the cap on switching costs, and the option of making the old contract premium-free as an alternative. Switching benefits from the statutory cap on switching fees of a maximum of 150 euros before the five-year mark, after which switching is free of charge. If you want to lock in your old guaranteed interest rate but stop paying expensive premiums, you can make the old contract premium-free and direct new contributions straight into the higher-return Altersvorsorgedepot.

Whether closing or leaving your old contract dormant pays off for you can be worked out using precise data. Our interactive subsidy calculator compares your existing Riester capital directly with the return prospects of the new account. You'll find additional expert orientation in our knowledge section. Please note that all comparisons and calculations are for illustration only and do not constitute investment advice within the meaning of section 1 (1a) no. 1a Kreditwesengesetz (KWG).

8. Step by step to a well-founded decision for your retirement provision

A well-founded decision for your private pension provision from 2027 rests on reliable facts and a structured analysis of your life situation^[1]. To make the transition to the subsidised account variant as smooth as possible, a planned, step-by-step approach is advisable. Start by using the neutral knowledge section to build a solid understanding of the new legal framework and to objectively review existing contracts such as old Riester policies. Only someone who knows the framework in detail can avoid costly mistakes.

In the second step, you should precisely quantify your individual requirements. Use the subsidy calculator to calculate the expected state allowances and tax effects for your personal savings profile. On this basis, you can reliably work out whether the account pays off for you compared with a conventional ETF savings plan. Please note that these calculations and models are for illustration and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

1. Step 1: Build knowledge and take stock. Analyse your current starting position and systematically compare the legal terms of the new Altersvorsorgedepot with unsubsidised forms of saving.
2. Step 2: Detailed quantitative analysis. Use the subsidy calculator to work out your personal subsidy rate, possible tax advantages, and the long-term cost impact of different provider tariffs.
3. Step 3: Determine the right decision path. Based on your own prior knowledge, decide whether you want to manage your investment independently through self-study or would prefer qualified professional advice.
4. Step 4: Concrete, legally sound implementation. Use the provider comparison tool to open an account independently with a neobroker, or choose the independent advice service for complex financial questions.

Both paths are completely equal and open to you here, without bias. If you have strong financial know-how and want to manage your retirement provision independently, your path leads straight to the right ETF solution with a broker. If, on the other hand, you'd prefer personal, professional guidance from independent experts, the Vorsorgedepot-Lotse portal puts you in touch with the right contact. That way, you make a well-founded, source-based retirement decision, completely free of time pressure or sales pressure.