Is the Riester-Rente still worth it? Checking your contract

Tilman Freyenhagen

Published on 27 October 2026 · Managing Director & Partner, Alsterspree Verlag GmbH

This article was written by an author with the support of AI.

Why do many Riester contracts fall short?

It is not the headline about pension reform that decides the fate of your Riester contract but the individual contract: what matters is its subsidy rate, its effective costs and its guaranteed interest rate. The documented criticism of Riester does not hit every contract equally hard, but it shows exactly what you need to check before you make a decision in 2027.

In its version of January 2026, the consumer advice centre states that many Riester contracts are unprofitable and expensive, and that the Riester-Rente (Germany's existing subsidised private pension) only pays off if you expect to live an unusually long time. The background is compulsory annuitisation: with few exceptions, an insurer pays a lifelong pension, which according to the consumer advice centre's calculation often becomes economical only from the age of 95.

• Many contracts are unprofitable and expensive; even with an attractive subsidy, the consumer advice centre recommends an independent review of the offer.
• The lifelong pension often pays off only if you reach the age of 95 or older.
• As a rule the subsidy is not a gift from the state but a shift of the tax burden into old age, because the later pension is taxed.
• With poor contracts, the subsidy can easily be eaten up by costs and below-average returns.

None of these statements amounts to a blanket recommendation against your contract. They give you the logic for checking: a high subsidy can offset costs and the annuitisation disadvantage, while with an expensive contract and a low subsidy it cannot. So the next step is to check how much subsidy your family and income situation actually brings, and then read costs and guarantee directly from your contract documents.

Who benefits from the subsidy?

The subsidy rate sets the annual subsidy against the total contribution, and it varies widely with family and income situation. An example from the consumer advice centre: a person with two children born after 2008 and a gross annual income of 30,000 euros receives 775 euros in allowances on a total contribution of 1,200 euros (425 euros own contribution plus 775 euros allowances), which puts the subsidy rate for the accumulation phase at 64.58 percent^[1]. High earners without children, by contrast, benefit mainly from the special-expense deduction: at 90,000 euros gross, a marginal tax rate of 42 percent plus solidarity surcharge and the maximum contribution of 2,100 euros, their subsidy rate is 44.31 percent according to the consumer advice centre^[1]. The subsidy works most strongly for low earners with several children: according to Stiftung Warentest's calculation, a parent with three young children and a mini-job receives 1,075 euros of subsidy a year for an own contribution of 60 euros^[2]. The higher your subsidy rate, the more likely it is to offset high effective costs and the annuitisation disadvantage.

How do you read the costs and guarantee of your contract?

Your basis for checking is the annual information statement that your provider must give you in writing every year under § 7a AltZertG, by the end of the year following the contribution year: among other things, it must show the costs incurred in the contribution year, the returns earned, the capital accumulated and the capital expected to be available at the start of payout^[3]. The projection is based on the contributions actually paid so far and on the figures in the product information sheet. From it you can read off how much of your payments is left after costs, and compare the expected capital with the contributions paid in. The effective costs are stated in the product information sheet of your contract. According to the consumer advice centre, the guaranteed interest rate can be roughly calculated from the annual statements; the consumer advice centres' advisers help with the calculation.

When should you continue the contract?

Continue the contract if your check gives a clear result: a high subsidy rate, as arises for low earners with several children, can offset high effective costs and the annuitisation disadvantage. A high guaranteed interest rate close to the current market level also speaks for keeping the contract. If neither can be confirmed, because the effective costs eat up the subsidy or the guaranteed capital is barely above the contributions paid in, your contract loses the check and you should look at the options from 2027.

What options do you have from 2027?

Existing contracts signed before 1 January 2027 have three routes: they can be continued with the current subsidy, moved into the new subsidy regime by declaration, or transferred to a new contract without repaying the subsidy^[5]. Anyone who takes out a new contract after 2026 moves into the new regime with all contracts (§ 52 Abs. 50a Satz 6 EStG), and there is no going back. The decision to switch is therefore irreversible, which is why this check of subsidy rate, effective costs and guaranteed interest rate always comes first.

Is the Altersvorsorgedepot the better choice?

The result of your check decides: if your Riester contract loses on subsidy rate, effective costs and guaranteed interest rate, the Altersvorsorgedepot (the new state-subsidised retirement investment account) is an alternative, because the transfer takes place without repaying the subsidy^[4]. Whether giving up the Riester guarantee is advantageous for you depends on your criteria: costs, investment style and entitlement to the subsidy. In that case, compare the Altersvorsorgedepot providers against these criteria before you transfer.

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