What return does the Altersvorsorgedepot generate? The subsidy checked

Tilman Freyenhagen

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

The sources of return in the Altersvorsorgedepot: a dual principle

The return on the new Altersvorsorgedepot, which replaces the previous Riester standard from 2027, rests on a dual principle. Unlike conventional, often low-return pension insurance policies, overall performance here comes from two complementary sources: the market return of the chosen ETFs and the additional return boost from the state subsidy. For committed self-directed investors who want to structure their pension provision cost-effectively and independently, this combination offers a highly efficient instrument. Through our knowledge section, we guide you neutrally towards a well-founded decision.

The market return forms the load-bearing foundation of your investment. Anyone who, for example, invested regularly via a savings plan in a broad global equity index such as the MSCI World over a 20-year period could historically achieve an average annual return of around 8.6 percent^[1]. With the Altersvorsorgedepot, you invest directly in such high-potential ETFs and equity funds, without expensive insurance wrappers, high upfront costs or inflexible guarantee structures eating into the real return in advance. In this modern system, the state top-up acts as a lever: every allowance received and every tax advantage immediately increases your invested capital, lifting your account's overall calculated return well beyond pure market performance.

The interplay of both factors leads, over the long term, to a noticeable compound-interest effect on a larger starting capital. While the pure market return can fluctuate, the state subsidy provides a reliable, risk-free performance boost right at the start of the savings phase. To work out the precise mathematical effect for your personal income situation, our digital subsidy calculator is available to you. This tool calculates your individual subsidy boost and shows the potential final sum transparently compared with unsubsidised savings routes. Note: these example calculations and models serve solely as illustration and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Base factor 1: what market return can you expect from equity ETFs?

The long-term return expectation of the Altersvorsorgedepot rests substantially on the performance of global capital markets. Anyone investing broadly in worldwide equity ETFs can expect an average market return of roughly 6 to 8 percent a year over the long term. This is shown by the historical performance of broad market indices such as the MSCI World over recent decades. Deutsches Aktieninstitut shows, for example, that monthly savings plans on the MSCI World over a 20-year investment period historically achieved an average annual return of over 8 percent^[2]. For you as a self-directed investor, this means your Altersvorsorgedepot builds on a proven, market-tracking foundation that can outpace inflation over the long term.

The compound-interest effect as a long-term return engine

Over a term of several decades, the compound-interest effect unfolds its full power. Because the returns generated stay in the account and are reinvested directly, the savings balance grows exponentially over time. Market-tracking ETFs act here as a highly efficient return engine, since they replicate the performance of thousands of companies worldwide cost-effectively and automatically reinvest dividend payments. This continuous return growth forms the foundation for your later top-up pension. In the state-subsidised Altersvorsorgedepot, this market return is supplemented by the additional subsidy boost, which lifts the overall return further. You'll find further well-founded articles and mathematical comparisons on this in our knowledge section.

To calculate precisely how market return and subsidy interact for your personal circumstances, you can use our source-based subsidy calculator. It compares the subsidised investment directly with a classic, unsubsidised ETF savings plan and shows you the exact advantage. Please always bear in mind with these calculations that past performance is no guarantee of future returns on the capital market. (Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.)

Base factor 2: the state subsidy as a guaranteed lever

The return on the Altersvorsorgedepot is made up of two sources: the market return of the ETFs and the additional return boost from state subsidies. While performance on the financial markets fluctuates, the state subsidy acts as a calculable, immediate additional return on your savings contribution. The new system ensures your payments are directly topped up by the state, giving them a guaranteed leverage efficiency that unsubsidised securities savings plans lack. We shed light on this leverage effect neutrally and with sources.

The structure of the new allowance subsidy from 2027

Under the BMF-documented guidelines for the reform of private pension provision, the annual basic allowance for the Altersvorsorgedepot rises to up to 540 euros^[3]. To receive this subsidy, an own contribution of 1,800 euros per calendar year is required. The allowance rate is tiered so that you get a state allowance of 50 percent on the first 360 euros of your contribution, while a rate of 25 percent applies to the remaining payments up to 1,800 euros. With the full own contribution, this results in a total subsidy rate of exactly 30 percent on your own savings. You can use our subsidy calculator to work out these figures precisely for your personal situation.

Alongside the basic allowance, child allowances play a decisive role especially for families. The state grants an allowance of up to 300 euros per Kindergeld-eligible child, in a one-to-one ratio to your own payment. These state allowances flow directly into your account as additional investment capital and take part in market performance from day one. This produces a significant compound-interest effect that noticeably lifts your long-term net return. Please note: all calculations and projections mentioned serve solely as illustration and do not represent guaranteed returns. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

The mathematical effect: how the subsidy increases overall return

The overall return on the Altersvorsorgedepot is made up of two components: the market return of your chosen ETF portfolio and the state return lever. The reform taking effect on 1 January 2027 brings a clear simplification: you get a 50 percent allowance on the first 360 euros of own contribution and 25 percent on amounts above that, up to a maximum of 1,800 euros a year^[4]. This produces an immediate return boost on your own capital that goes far beyond classic capital-market performance.

The leverage effect is particularly strong at lower own contributions. If you pay in only 360 euros a year, for example, you get 180 euros of state allowance on top. That's equivalent to a calculated immediate return of 50 percent on your own capital. Because these allowances are reinvested directly in the account, they work through the compound-interest effect from day one. Over the term, this produces a considerable mathematical extra gain compared with an unsubsidised ETF savings plan. For precise projections, our subsidy calculator is available to you.

This lever shifts depending on your life situation and income bracket. While lower earners and families with children experience the strongest relative boost through additional allowances, higher earners additionally benefit from tax advantages via the special-expense deduction^[4]. For detailed articles, take a look at our knowledge section. Please note: the calculations serve as illustration only. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Cost and tax effects: what reduces or increases the net return?

The real performance of your investment depends crucially on charges and fees. The Altersvorsorgedepot offers a considerable advantage here over a classic, unsubsidised securities account. Throughout the entire accumulation phase, the accumulated assets remain completely exempt from capital gains tax^[3]. This means no tax is charged on realised price gains, dividend distributions or the annual notional advance lump sum (Vorabpauschale). All returns therefore flow straight back into the investment cycle without deduction. This tax-deferral effect noticeably maximises the compound-interest lever over the decades, since the gross capital can keep working for you undiminished.

To keep costs low for savers, the legislature has set a statutory cost cap of a maximum of 1.0 percent effective costs per year for certified standard accounts^[5]. This ceiling protects investors from excessive administration fees, which often ate up a large share of returns under traditional Riester contracts. Set against this is the principle of deferred taxation. This means the returns and subsidised contributions are only taxed at the payout stage in retirement. Since personal income in old age is usually lower than during working life, you benefit in most cases from a noticeably lower tax rate on your payouts.

To calculate how these statutory conditions affect your personal wealth, a precise calculation is worthwhile. With the subsidy calculator, you can simulate the interplay of the cost cap, tax deferral and state allowance for your individual circumstances, creating a well-founded basis for your private pension provision.

Comparison with an unsubsidised ETF savings plan: when is the AVD worth it?

When it comes to private pension provision, self-directed investors often face the question of whether to opt for the new state-subsidised Altersvorsorgedepot (AVD) or use a classic, unsubsidised ETF savings plan. The key difference lies in the interplay of direct allowances and tax relief during the accumulation phase, while the regular account offers maximum flexibility over time. The subsidy calculator provides a useful tool for weighing this up individually.

The break-even point and the tax lever

During the accumulation phase, the state-subsidised account allows tax-free reinvestment of dividends and price gains, since no annual advance lump sum applies. Savers can also claim their contributions as special expenses up to the statutory ceilings, which reduces their tax burden in the year of payment^[4]. The break-even point, at which the subsidised model outperforms the unsubsidised savings plan despite deferred taxation in old age, depends largely on your personal subsidy rate. Further details and well-founded calculations on this are available in the Altersvorsorgedepot guides.

Decision guide for self-directed investors

The subsidised Altersvorsorgedepot is particularly suited to people who benefit from high subsidy rates, such as families through additional child allowances or higher earners through the tax-based special-expense deduction^[4]. Anyone who wants to retain full flexibility to potentially use the money for other purposes before retirement, on the other hand, may find the conventional ETF savings plan a sensible option. Illustrative model calculation, not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Risk and safety: return expectations without a contribution guarantee

The return expectation of the new Altersvorsorgedepot is noticeably higher than that of classic Riester contracts, since it can dispense with a rigid 100 percent contribution guarantee. While Riester products were forced to invest most contributions in low-return, nominally safe bonds, savings rates in the new account flow 100 percent into high-potential equity ETFs. This lifts the long-term return expectation to the level of the broad equity market, but naturally brings market-typical price fluctuations with it. Deutsches Aktieninstitut shows in its historical MSCI World return triangle that investors with a 20-year investment horizon achieved an average annual return of 8.6 percent^[1].

The actual overall return is made up of two key building blocks: the usual market performance of the chosen portfolio and the additional return boost from state allowances and tax relief. Exactly how this interplay works can be calculated individually.

As a self-directed investor, you bear the investment risk yourself. Doing without guarantees means your account balance at the start of retirement can be lower than the contributions paid in. This risk can be minimised through a long investment horizon and broad diversification. Use the knowledge section to inform yourself thoroughly about how the account works. If you want to simulate your personal subsidy rate and the interplay of the levers, our subsidy calculator is available to you free of charge. Important note: not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG. Past performance is not a reliable indicator of future results.

Decision guide: your steps to the optimal pension route

The overall return in your Altersvorsorgedepot is made up of two key drivers: the pure market return of your chosen securities and the additional return boost from the state subsidy. Historical market data shows that a broadly diversified equity ETF, for example on the global MSCI World index, historically achieved an average annual return of 8.6 percent over a 20-year investment horizon^[1]. This return is further leveraged by the state allowance or the tax deduction. Since developments on the stock market naturally fluctuate, while the state subsidy structures are set by law and thus clearly calculable, we deliberately avoid unrealistic promises. Instead, we guide you as a neutral navigator towards a mathematically sound decision.

1. Step 1: calculate your individual subsidy amount. Use the interactive subsidy calculator tool to precisely work out your personal state allowance, the potential tax advantages and the expected final capital compared with an unsubsidised investment. Our digital tool gives you a transparent, reliable mathematical basis for this.
2. Step 2: determine the right advice route. Use the knowledge section and its resources to gain clarity on your own preferences. Decide calmly whether you'd rather manage your pension provision independently online or prefer support from an adviser.
3. Step 3: start the concrete implementation. If you want to act as a self-directed investor, use the provider comparison tool to compare the terms and fee structures of the various neobrokers. If you'd prefer personal, tailored support instead, our independent advice service puts you in touch with a licensed, independent financial expert.

Whichever of the two routes you ultimately choose, our portal stands by you with neutral facts and transparent methods to help you navigate the Riester reform and the new state subsidy safely. Please always note: all calculations, historical comparisons and projections serve solely as illustration and do not represent a guaranteed return or future performance. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.