Suspend your Riester-Rente or keep paying?

Tilman Freyenhagen

Published on 5 August 2026 · Updated on 7 August 2026 · Managing Director & Partner, Alsterspree Verlag GmbH

The 2027 reform in view: what does suspending contributions mean?

If you suspend your Riester contract before the 2027 reform, you temporarily stop paying in your own contributions, but you forfeit the annual state allowances and still have to cover the provider's ongoing administration costs out of your existing balance. Continuing to pay contributions until the end of 2026 is therefore the economically smarter option in most cases, because it captures the full state subsidy and builds up the balance as the largest possible capital base for the tax-free transfer into the new Altersvorsorgedepot. Suspending the contract is nonetheless the informal alternative to a costly cancellation: the state support you have already received does not have to be repaid, the allowances stay in the Riester account, and you can resume paying contributions at any time^[1].

With the pension reform on the horizon, many of the roughly 15 million Riester savers face the question of what to do with their legacy contracts before the new subsidy system starts in 2027. Fear of making the wrong call often leads to hasty cancellations. The law grants comprehensive grandfathering for every existing contract. Cancelling means that every allowance and tax benefit received so far must be repaid immediately to the Zentrale Zulagenstelle für Altersvermögen (the central allowance office for retirement assets, ZfA)^[2]. Suspending contributions reliably prevents this damaging loss of subsidy.

The legal mechanics of suspending contributions

In technical terms, letting a contract rest is known as suspending contributions. It means the contractual duty to keep paying in is suspended, while the contract itself remains fully in force in legal terms. The capital you have already saved stays with the provider and continues to be invested under the original terms. You can resume payments at any point during the contract term, depending on the tariff conditions; simply contact the provider, and once the contract is reactivated, you can apply for state support again too^[1].

• Full capital protection: the balance you have saved so far, including every allowance, stays in the contract account.
• Informal process: a written notice to the provider is enough to stop the monthly payments.
• Reactivation at any time: you can resume paying contributions flexibly, whenever your finances allow.
• Grandfathering preserved: the contract keeps every statutory transitional right for the 2027 reform.

Suspending contributions buys savers a practical breathing space. Even so, the operational consequences of the dormant period need to be analysed carefully before making that decision.

The hidden cost trap: why suspended contracts shrink

A widespread misconception among savers is that a suspended Riester contract keeps running entirely free of charge. According to Deutsche Rentenversicherung, administration costs continue to accrue even once you suspend your Riester-Rente, and are deducted from the existing Riester assets^[1]. The exact amount varies by provider and can be found in your contract documents.

Once no new own contributions come in and the state allowances stop at the same time, the contract has no fresh capital inflow at all. If the ongoing administration costs aren't covered by sufficient returns on the underlying investment, the balance shrinks step by step. This leads to a continuous erosion of the capital, especially for insurance-based Riester contracts with high fixed annual administration costs.

Cost comparison in practice: active vs. suspended

To illustrate how ongoing fees affect your savings, it's worth looking at the basic cost mechanics in both contract states.

Anyone suspending their contract therefore needs to check whether the provider's annual performance outstrips the fixed administration costs. If it doesn't, the cost structure will gradually eat away at the capital paid in.

The direct loss of allowances: what you give up by pausing

Alongside the ongoing cost burden, the immediate loss of state support is the most serious drawback of suspending contributions. To receive the full state pension allowance, those eligible must pay in at least 4 percent of their previous year's income subject to social-insurance contributions (minus the allowances) as their own contribution each year. If you stop paying in during the current year, you should expect a correspondingly reduced allowance; if nothing at all is paid in for a whole year, there is no state support whatsoever^[1].

Subsidy building blocks at a glance

Lawmakers grant several subsidy components under the old Riester system, which go unused if you stop contributing.

• Basic allowance: up to 175 euros a year per eligible person.
• Child allowance: 300 euros a year for each child born from 2008 onwards, and 185 euros for children born before 2008.
• Tax deduction as a special expense (Sonderausgabenabzug): giving up the deduction of retirement contributions and allowances up to the maximum of 2,100 euros in your income tax return.
• Indirect eligibility: if the directly eligible partner loses their entitlement by suspending contributions, the spouse who is only indirectly eligible for allowances often loses theirs too.

A further legal aspect concerns protection against seizure by creditors and means-testing. A Riester contract enjoys statutory protection from seizure under the Code of Civil Procedure only to the extent that the contributions in the relevant saving year were actually state-subsidised^[4]. If the contract is suspended and subsidy for new periods lapses, that protection from seizure does not extend to new income for that period.

Continuing to pay as a bridging strategy: securing allowances until the end of 2026

If you can afford it before the 2027 reform starts, you should use continuing to pay your Riester contributions as a deliberate bridging strategy. Up to the cut-off date of 31 December 2026, the existing statutory subsidy rules remain fully in force. Every euro you pay in therefore still triggers the full allowance rate and the corresponding tax benefits.

Why continuing until the end of 2026 pays off

By keeping up their own contributions, savers lock in a direct subsidy return until the Altersvorsorgedepot launches. For families with children or lower earners especially, the state allowance rate accounts for a substantial share of the total amount paid in.

1. Maximising the subsidy rate: the state allowances flow directly into the contract's assets until the end of 2026.
2. Tax relief: you can still make full use of the Sonderausgabenabzug in your annual income tax return.
3. Building switching capital: the higher your balance at the end of 2026, the more capital is available for the transfer into the new system.
4. Boosting the compound-interest effect: the subsidy money you have secured keeps earning interest in the contract until the system switches.

Rather than letting ongoing administration costs shrink the contract balance while it sits dormant, continuing to save stabilises and grows the foundation for the coming reform.

The 2027 transfer: more capital for the new Altersvorsorgedepot

The legal framework of the pension reform provides that, from 2027, the assets saved in the old Riester contract can be transferred into the new Altersvorsorgedepot without any tax disadvantage. This system switch does not count as harmful use, so neither the allowances received nor the tax benefits have to be repaid to the state.

A larger capital base in the legacy contract means a bigger starting sum for the Altersvorsorgedepot at the point of switching. Because the new system lets you choose, among other things, cost-optimised ETF portfolios without contribution guarantees, a larger starting capital benefits especially strongly from long-term market and return potential.

Switching costs capped by law

To protect consumers from runaway fees when changing provider, the Federal Ministry of Finance (BMF) has set clear caps on the cost structure.

• Spreading of acquisition costs: future acquisition costs must be spread evenly across the whole savings phase.
• Free exit: after five years of the contract, the existing provider must offer the switch free of charge.
• Capped administrative flat fee: the receiving provider may charge a switching flat fee of at most 150 euros for the transfer.

These transparent cost caps ensure that the capital you have saved stays largely intact during the switch and can go on being invested efficiently in the new Altersvorsorgedepot.

Calculating your decision: use the calculator and act

Whether a Riester contract should keep being paid into until the end of 2026 or be suspended depends largely on the individual contract fees and your personal allowance entitlement. As a neutral source of guidance, the knowledge section supports you with well-founded analysis. With our interactive subsidy calculator, you can simulate the exact cost impact of suspending contributions against continuing to pay, for your personal situation.

Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG. All calculations and model scenarios are illustrative only and do not constitute individual financial or tax advice.

Recommended next steps for your retirement provision

For the practical implementation of your decision, two clear, legally reliable routes are open to you.

1. Option A (suspend contributions): send your Riester provider an informal letter with your contract number and your signature. If you have given the provider a standing authorisation to file the allowance application, remember to revoke it.
2. Option B (keep paying until the end of 2026): keep paying at least the minimum own contribution, lock in the full allowances, and check your contract balance regularly with the 2027 system switch in mind.
3. Additional advice: if you're unsure about your contract terms, use our independent advice service to arrange a personal guidance conversation with a qualified expert from our nationwide network.

As an independent navigator, Vorsorgedepot-Lotse guides you transparently through the transition to the 2027 reform, so you can put your private pension provision on a solid footing — on your own or with professional support.