What new state pension subsidy can I get?

Tilman Freyenhagen

Published on 30 July 2026 · Updated on 7 August 2026 · Managing Director & Partner, Alsterspree Verlag GmbH

The new subsidy system from 2027 at a glance

From 1 January 2027, your state pension subsidy will follow your personal circumstances transparently: adults get a contribution-proportional basic allowance of up to 540 euros a year in the new Altersvorsorgedepot, plus a child allowance of up to 300 euros per child. Career starters under 25 also get a one-off bonus of 200 euros^[1], while a dedicated instrument is planned for children between 6 and 18 with the Frühstart-Rente. The new subsidy concept replaces the previous Riester system and swaps rigid minimum own contributions for a transparent, percentage-based top-up.

The four state subsidy components from 2027

Alongside the direct allowances, the special-expense tax deduction remains in place. As part of the automatic best-outcome check, the tax office establishes whether your tax saving exceeds the allowances and pays out the difference as a tax refund. Through the knowledge section we provide all the legal framework neutrally. The calculations shown are illustrative examples only (not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG).

Basic allowance in the Altersvorsorgedepot: tiers and maximum rates

The Altersvorsorgereformgesetz (pension reform act) replaces the previous Riester logic from 2027 with a purely contribution-proportional basic allowance. The size of the state subsidy depends directly on the own contribution you choose and is split into two statutory subsidy tiers. Tier 1 rewards smaller savings rates particularly strongly: for every euro paid in up to a limit of 360 euros a year, you get 50 cents as a state allowance, equivalent to a maximum partial subsidy of 180 euros. In Tier 2, the state pays a further 25 cents for every additional euro saved between 361 euros and 1,800 euros. Anyone who saves the maximum amount of 1,800 euros a year therefore reaches the maximum basic allowance of 540 euros a year.

This mechanism ensures that even small monthly own contributions produce a noticeable subsidy rate. At the same time, the system continues to reward higher savings amounts right up to the subsidy ceiling. As the statutory figures show, the assessment is transparent and does not rely on complicated minimum-contribution calculations based on the previous year's income.

All model calculations serve solely to illustrate the statutory system and do not constitute investment advice (not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG). Depending on your personal circumstances, additional subsidy components such as child allowances or career-starter bonuses may be added on top of the basic allowance.

Child allowance: 1 euro of subsidy for every euro saved

With the reform of subsidised private pension provision from 2027, the legislature fundamentally simplifies state support for families. Going forward, parents get a direct one-to-one subsidy in the Altersvorsorgedepot: for every euro you pay in as your own contribution, you get exactly 1 euro of state child allowance credited^[3], up to a maximum of 300 euros per child per year. This direct link replaces rigid calculation formulas and makes your state subsidy entitlement transparently plannable, even from small monthly amounts.

Important new rules for parents in the Altersvorsorgedepot

• One-to-one matching: for every euro paid in, you secure a full 100% state child allowance up to the ceiling of 300 euros per child.
• Old birth-year limits abolished: the previous distinction based on a child's birth year is dropped entirely; a single ceiling of up to 300 euros now applies to all eligible children.
• Flexible allocation: the allowance generally belongs to the parent who receives Kindergeld. Jointly assessed parent couples can agree to transfer the allocation to the other parent's account.

Thanks to the simplified logic, families can plan specifically how to split their own contribution to make the most of the maximum family subsidy. Because the child allowance flows directly into the investment capital on top of the state basic allowance, the account benefits fully from the return effect of the chosen investment over the years.

Career-starter bonus: a head start under 25

Young adults who start building private wealth early benefit from targeted incentives in the new subsidy system from 2027. To make entry into the Altersvorsorgedepot attractive, the law provides a special additional subsidy for young savers who have not yet turned 25. Anyone who has not yet turned 25 at the start of the relevant contribution year and is eligible receives a one-off career-starter bonus of 200 euros^[5]. This state credit is paid directly into the subsidised contract and boosts the starting capital.

Criteria and requirements for the career-starter bonus

• Age limit: what matters is the age at the start of the relevant contribution year. Those eligible must not yet have turned 25.
• One-off credit: the bonus is a flat 200 euros, paid once in addition to the regular basic allowance.
• Activation: payment requires the general conditions for the state pension subsidy to be met and the required own contribution to be paid.

The real leverage of this early bonus lies in the long-term compound-interest effect. If a special payment of 200 euros flows into a market-tracking portfolio as early as ages 18 to 24, this amount can grow noticeably over an investment horizon of more than 40 years until retirement. Even at moderate returns, early capital formation adds valuable weight to the overall return. It is therefore worth trainees, students and career starters checking the subsidy criteria early and planning their own contribution accordingly.

Note on the calculation: all model calculations and example figures serve solely to illustrate the system and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Frühstart-Rente: state subsidy for children aged 6 to 18

With the Frühstart-Rente, the federal government is planning a stand-alone subsidy component intended to secure children and teenagers starting capital for private pension provision before they enter working life. Under the key points adopted by the cabinet, the state is to pay 10 euros a month directly into a retirement investment account for the child, from the child's 6th until their 18th birthday – retroactively from 1 January 2026.^[6] Unlike the Altersvorsorgedepot, the Frühstart-Rente is not yet law: the draft bill has been announced for 2026.

Key pillars of the Frühstart-Rente at a glance

• Age range and duration: the state subsidy is set to kick in from the child's 6th birthday and run for up to 12 years until they turn 18.
• Monthly state contribution: the federal government is to transfer 10 euros a month (120 euros a year) as a fixed amount, with no own contribution required from the parents.
• Automatic collective investment: if parents do not set up an individual account with a certified provider, contributions are to be invested collectively by birth cohort with minimal bureaucracy, so no subsidy entitlement is lost.
• Tax treatment: all returns and gains in value are set to remain tax-free throughout the entire accumulation phase, right up to retirement.

The key advantage of this early subsidy lies in the long investment horizon. Through early investment over up to twelve years, the compound-interest effect takes hold even before the start of vocational training or university study^[6]. Once the child turns 18, the accumulated balance is then set to be transferred seamlessly into the young adult's own Altersvorsorgedepot and continue to be saved independently^[6]. Model calculations and projections serve solely as illustration (not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG).

Subsidy for the self-employed and lower earners

With the Altersvorsorgereformgesetz, the legislature fundamentally expands the group of people entitled to the subsidy from 1 January 2027. Until now, self-employed people and freelancers without compulsory statutory pension insurance were largely excluded from Riester-Rente state allowances. The new Altersvorsorgedepot closes this gap and, for the first time, gives self-employed people and members of professional pension schemes direct access to the state subsidy. At the same time, the system creates incentives for lower-income households by lowering the required minimum own contribution to a low fixed amount^[7].

Direct subsidy entitlement for the self-employed from 2027

From 2027, self-employed people with income from a trade (§ 15 EStG) or freelance work (§ 18 EStG) get direct entitlement to the Altersvorsorgedepot subsidy^[7]. The same applies to compulsory members of professional pension institutions such as doctors, lawyers or architects. The only formal requirement to claim it is filing an income tax return. This means the self-employed can claim their own contributions as special expenses as part of the best-outcome check, on top of benefiting from the direct state allowances.

A low entry hurdle from a 10-euro monthly contribution

For people on lower incomes, the Altersvorsorgedepot offers a particularly high percentage subsidy rate: on the first 360 euros of own contribution, the state pays a 50 percent allowance. An own contribution of just 10 euros a month, or 120 euros a year, is already enough for state top-ups to flow into the subsidised account volume and reinforce the compound-interest effect throughout the accumulation phase; the maximum basic allowance of 540 euros, however, requires payments of 1,800 euros a year.^[7] Please note that calculations and subsidy rates are always illustrative and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Tax advantage and the best-outcome check in your tax return

Alongside the direct allowance subsidy, the new Altersvorsorgedepot offers noticeable tax relief from 2027 via the special-expense deduction in the income tax return. Savers can claim their own contributions as special expenses, with the statutory ceiling set at a subsidised own contribution of up to 1,800 euros per calendar year^[7]. In structuring the tax subsidy, the tax authority automatically checks which type of subsidy brings the greatest financial benefit for the individual income situation.

How the tax office's automatic tax check works

The interplay between allowances and tax advantage is based on the BMF-documented best-outcome check under § 10a EStG. When you file your tax return, the tax office determines your individual tax relief from the special-expense deduction and compares it with the allowances already credited^[7]. If the deduction produces a greater benefit than the allowance, the difference is refunded directly via the tax assessment.

• Special-expense deduction up to 1,800 euros: own contributions up to this ceiling reduce your taxable income.
• Automatic best-outcome check: the tax authority compares the allowance entitlement against the tax saving without a separate application.
• Direct refund of the tax difference: if the individual tax advantage exceeds the state allowances, the tax office pays out the difference directly.
• Allowances stay in the account: basic and child allowances already credited remain in the Altersvorsorgedepot and keep working continuously on the capital market.

For taxpayers with medium to higher incomes in particular, the best-outcome check regularly results in an additional tax refund, since their personal tax rate exceeds the flat allowance rate. This is how the law combines direct subsidy with flexible tax relief. Note: illustrative model calculation, not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Guidance for practice: finding the right pension strategy

To make the most of the state subsidy from 1 January 2027, an honest assessment of your personal circumstances is the foundation^[7]. Factors such as your annual gross income, marital status and the number of Kindergeld-eligible children directly determine the level of your allowances and tax advantages. With the key 2027 figures and our subsidy calculator, you can run through various savings scenarios precisely in advance.

Two ways to get started: digital comparison or personal advice

When it comes to putting your investment strategy into practice, two equally valid paths are open to you. Self-directed investors who want to manage their own investments use a digital solution for a direct sign-up. Those who want to clarify individual questions about tax optimisation or replacing an old contract, on the other hand, benefit from qualified professional advice.

As next steps in preparation, we recommend carefully reviewing any existing Riester or pension contracts and documenting your calculated subsidy entitlements. For more detail on choosing the right route, our guide on personal advice offers deeper information. Note: all calculations and comparisons are for guidance only. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.