On March 27, 2026, the Bundestag passed the law on the reform of tax-incentivized private pension provision. This reform is intended to replace the so-called Riester pension. Anyone who has already concluded a Riester contract can continue to save in it even after the reform. There is no automatic termination or conversion. From 2027, however, it will no longer be possible to conclude contracts based on the old Riester model. However, it will be possible to voluntarily switch to the new pension plan.
The new private pension plan is to be made easier especially for people with low and medium incomes. It is also intended to offer people with little capital market experience an opportunity to make provision for old age. There will also be a Further draft law to an "early start pension". The aim is to provide young people with a starting capital for their old-age provision early in life through guaranteed state subsidies.
Retirement savings account without guarantee
In future, a cost-effective, simple, transparent and easily explained range of new private pension products is to be offered. To enable these products to achieve higher returns in the savings phase, the criteria that have applied to date for the certification of a pension contract are to be revised.
A retirement savings account without guarantee requirements is to be introduced as a new product category and enable higher potential returns. This will allow people to save for their old age with shares, funds and exchange-traded funds (ETFs). In addition, there are still guaranteed products for pensioners with a greater need for security, where the guaranteed capital may not fall below 80% or 100% of the contributions paid in.
The existing system will be retained: The current structure of tax incentives via allowances with high subsidy rates for pensioners with low and medium incomes and families with children as well as the special expense deduction in the savings phase and deferred taxation of benefits in the payout phase should be retained.
The aim is to simplify and make more transparent the existing support through basic and child allowances in proportion to contributions, to take greater account of the contributions made by pensioners and therefore provide greater incentives to make more personal savings.
The Pension Reform Act passed by the Finance Committee has been amended in some points compared to the government draft. For example
- pension savings should be made possible via a new sovereign wealth fund,
- the subsidy for low-income earners should be increased,
- the cost cap for providers of financial products will be lowered (effective costs for the standard custody account 1% instead of the previously envisaged1.5%) and
- the group of beneficiaries should be extended to include the self-employed.
Promotion via allowances: The previously planned fixed allowance in cents per euro of savings will be replaced by a percentage-based allowance. This means that the allowance will be 50% of the pension contributions made in the contribution year up to an amount of €360 and 25% of the pension contributions made in the contribution year in an amount of more than €360 up to an amount of €1,800. This means that the maximum basic allowance can amount to a total of €540.
There is also a change in the allowance for savers with children, which amounts to €100 per year up to a personal contribution of €300. This will particularly benefit parents with low to medium personal contributions.
Standard deposit offer from public institutions: Whereas the offering of retirement savings accounts was previously reserved for private companies, the amendment "authorizes the Federal Government to issue a statutory ordinance without the consent of the Bundesrat to implement a standard deposit contract offered by a public institution". The offer of the public institution is to be available to all those entitled to a supplementary allowance as an alternative to the privately offered products.