Altersvorsorgedepot or Riester: the key differences

Tilman Freyenhagen

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

The paradigm shift from 2027: from the Riester model to the modern Altersvorsorgedepot

The fundamental difference between Riester and the new Altersvorsorgedepot (AVD) lies in the form of investment and the contribution guarantee: while Riester mandates a 100 percent contribution guarantee and therefore generates barely any return, the AVD does away with this mandatory guarantee from 2027, in order to offer you significantly higher long-term return potential through equities and ETFs. The state subsidy structure of allowances and tax advantages remains broadly similar, but product costs fall drastically under the account model.

Why the legislator is rethinking: the end of the Riester-Rente

The Riester-Rente, introduced in 2002, has long suffered from a systemic problem: the statutory requirement to guarantee 100 percent of all contributions paid in by the start of retirement. In the prolonged low-interest-rate environment, this meant providers could barely invest savers' money in higher-return equities and instead had to shift it into low-yield government bonds. High fees also eat into the savings. According to calculations by the citizens' movement Finanzwende, an average of around 24 percent of contributions and allowances in a typical Riester pension insurance policy flows directly into the provider's costs over a 30-year term^[1]. With the pension reform from 2027, the federal government is drawing the consequences and creating a modern, low-cost alternative with the Altersvorsorgedepot.

Our aim at Vorsorgedepot-Lotse is to act as a reliable partner and offer you guidance through the transition to this new system. Whether you should keep your existing Riester contract or switch, as a current Riester saver, depends heavily on your personal situation. Our knowledge section gives you more in-depth guides on all the options. In addition, the subsidy calculator gives you an initial, transparent comparison of subsidy scenarios. For a tailored solution, our independent advice service is available to connect you easily with qualified professionals. This does not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Contribution guarantee compared: absolute security versus maximum return potential

With the classic Riester-Rente, a rigid contribution guarantee of 100% is required by law. This means providers must guarantee all contributions paid in and all state allowances by the start of the payout phase. What sounds like absolute security at first glance often turns out, in practice, to be a significant drag on returns: to meet this promise, providers must invest most of the capital in low-volatility but low-yield bonds. With the new Altersvorsorgedepot (AVD), which launches on 1 January 2027, this statutory obligation is dropped for new business. Savers can therefore consciously choose options without a rigid contribution guarantee, which opens the way to an equity allocation of up to 100%^[2].

Doing away with a rigid contribution guarantee allows the Altersvorsorgedepot to invest the capital broadly diversified in global equity ETFs. Alongside return potential, product costs also play a decisive role in your long-term wealth building. While conventional Riester pension insurance policies often show high effective costs of between 1.0% and 1.5% per year^[3], ETF-based accounts stand out for having far leaner cost structures. You can use the subsidy calculator to work out exactly how this cost advantage can affect your eventual final capital. For a detailed explanation of all the regulatory aspects, our knowledge section is also available. Please note: all calculations and comparisons are for illustration only and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Investment options and return potential: insurer reserve funds versus broadly diversified ETFs

The conventional Riester-Rente has suffered for years from its rigid statutory investment rules. Because providers are required to guarantee one hundred percent of contributions paid in by the start of retirement, most of the capital flows into insurers' so-called Deckungsstock (reserve fund). These protected assets are invested extremely conservatively, with low returns. Combined with high distribution and administration costs, whose annual effective cost ratio is often 1.5 percent or higher, there is barely any room left for genuine wealth building^[4]. The contribution guarantee thus comes almost entirely at the expense of your long-term return.

The new Altersvorsorgedepot breaks with this rigid mechanism. Because the account does not mandate a contribution guarantee, you can invest one hundred percent of your contributions in broadly diversified ETFs and higher-return equity funds. Our knowledge section offers in-depth guides on this. Because the Altersvorsorgedepot also dispenses with expensive insurance wrappers, the cost burden is significantly lower, which maximises the compound-interest effect over the decades.

With the subsidy calculator you can transparently calculate the long-term effects of different cost and return scenarios for your own situation. Please note: all calculations shown are for illustration and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Cost structure under scrutiny: average Riester fees versus the account's cost cap

Alongside the question of protection, the cost structure is probably the biggest factor influencing the amount of your eventual pension. Classic Riester contracts have been criticised for years over their high fees. According to an analysis by the citizens' movement Finanzwende, Riester pension insurance policies show an average effective cost ratio of 1.67 percent per year^[5]. This means that a substantial share of your contributions and allowances is eaten up directly by distribution and administration costs. With the new Altersvorsorgedepot, by contrast, a statutory cost cap of a maximum of 1.0 percent per year applies to state-certified standard products, which significantly reduces the cost burden.

The financial leverage of this difference is immense. By doing away with expensive set-up fees and strictly capping annual product costs, a far larger share of your capital remains invested in the market to generate returns. Even a one-percentage-point reduction in the annual cost burden can, thanks to the compound-interest effect, make a difference of several tens of thousands of euros to your final retirement assets over a 30-year saving period. Important to know for savers considering switching: the cost of switching to the new account is capped at a maximum of 150 euros in the first five years, after which switching is completely free.

With the subsidy calculator you can easily calculate the effect of reduced fees on your private retirement provision. In addition, our knowledge section offers neutral analysis of the reform. Our independent advice service is available for personal guidance. Note: all calculations and comparisons are for illustration and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

State allowances and subsidy logic: similarities and detailed improvements from 2027

State subsidy remains the core of subsidised private retirement provision from 2027 too. While the previous Riester-Rente offered a fixed Grundzulage of a maximum of 175 euros per year, the new Altersvorsorgedepot introduces a substantially more flexible and more rewarding subsidy system. According to the Federal Ministry of Finance's official FAQ, the maximum annual Grundzulage rises to up to 540 euros in the new system^[6]. This amount is calculated according to a statutorily fixed, two-tier logic: the state supplements your payments with an allowance rate of 50 percent on the first 360 euros and a further 25 percent on any contribution above that, up to a total of 1,800 euros. For you as a Riester saver, this means a substantial increase in direct state support for a comparable or optimised own contribution, since the allowances flow directly into the fund investment you choose.

Alongside this significantly increased Grundzulage, the tried-and-tested state support for families remains in place. The Kinderzulage continues to be up to 300 euros per child and year, and is subsidised on a one-to-one basis. Young savers under 25 also benefit from a one-off career-starter bonus of 200 euros at the start of the contract. On the tax side, the tried-and-tested principle of deferred taxation remains, and your contributions can be claimed as special expenses (Sonderausgaben) on your tax return. To calculate your individual subsidy situation and potential final capital precisely, our neutral knowledge section and the integrated subsidy calculator are available to help. For more in-depth questions, our independent advice service connects you free of charge with licensed financial advisers for a detailed individual review. (This does not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.)

Expanding eligibility: new prospects for the self-employed and freelancers

For the self-employed and freelancers, the new Altersvorsorgedepot marks a genuine turning point in state-subsidised retirement provision. While the old Riester system largely excluded this group from direct subsidy, unless they were subject to compulsory statutory insurance or eligible indirectly through a spouse, the reform opens up eligibility to all self-employed people from January 2027^[7]. This expansion, documented by the BMF, allows you for the first time to make straightforward use of state allowances to build wealth. In our knowledge section we lay out these statutory changes transparently for you.

How the self-employed activate state allowances

To activate the full state allowances of up to 540 euros per year, you pay your contributions directly into your Altersvorsorgedepot^[8]. The subsidy system is optimally tailored to the needs of freelancers: there are no more rigid pension insurance contracts. You can flexibly adjust your savings rate at any time, or pause it if needed, which provides essential security when income fluctuates. Because the account does without expensive contribution guarantees, your contributions flow directly into higher-return ETFs.

With our subsidy calculator you can calculate the expected cost savings and final capital compared with unsubsidised forms of investment. We accompany you neutrally on the way to your decision. If you would like personal advice, we are happy to refer you to a licensed expert through our independent advice service. Please note: the calculations are illustrative and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Flexibility in the payout phase: lifelong pension versus flexible drawdown plans

The payout phase reveals one of the most profound differences between the two systems. While classic Riester contracts are characterised by a strict requirement to convert into an annuity, the Altersvorsorgedepot offers significantly more flexible options from age 65^[6]. Riester savers receive a lifelong pension by default, with a maximum of 30 percent of the capital allowed to be withdrawn as a lump sum at the start of the payout phase. The Altersvorsorgedepot, by contrast, breaks with this rigidity: alongside lifelong protection, structured, time-limited drawdown plans are possible up to age 85, giving you higher liquidity in the first years of retirement.

Both retirement models share a central tax principle: deferred taxation. This means you benefit from tax advantages during the accumulation phase, but payments in retirement must be taxed at your personal income tax rate. Because the tax rate in retirement is usually lower than during your working life, this results in a tax advantage. With the Altersvorsorgedepot, any capital not yet withdrawn remains invested on the capital markets during the payout phase, offering further return potential. For a detailed comparison of the tax aspects and a non-binding projection, you can use the knowledge section or run calculations with the subsidy calculator (this does not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG).

Switch or stay: the strategic transition of existing Riester contracts

For millions of Riester savers, the launch of the new subsidised retirement provision in 2027 raises the key question of whether to transfer their existing retirement savings or stay in the old system. For this, the legislator has created a direct, subsidy-preserving transfer method into the new Altersvorsorgedepot. This means: if you transfer your accumulated capital, including all the state allowances and tax advantages you have already received, to a new account, this subsidy is fully preserved and there is no detrimental use. You therefore do not have to pay tax on the capital or repay the allowances received, provided the transfer goes directly into the new product world^[6].

The statutory cost cap and important deadlines

To protect consumers from excessive fees when switching, the reform law provides a clear statutory cap. The receiving provider may charge a maximum administration fee of 150 euros for transferring your accumulated balance^[6]. However, this ceiling only applies for the first five years after taking out the new contract. From the sixth year of the contract onward, switching is even possible completely free of charge, which secures competition and your flexibility in the long term. Even so, you should check the exact terms of your current Riester contract before switching.

• Reviewing the existing pension commitments and guarantees of the Riester contract
• Comparing the old administration costs with the account fees of the new provider
• Calculating the remaining term until the planned retirement date
• Analysing past performance and future return potential in the account

A strategic switch offers considerable opportunities for a higher return through ETFs, especially for younger savers, while older savers may benefit from the old guarantee commitments. For a precise assessment, it is worth using digital tools. Our subsidy calculator helps you calculate the financial effects of switching transparently. For a deeper analysis of your individual situation, you can also access our knowledge section. Please note: this does not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.