Riester 2.0: Boosting Your Retirement Savings

1. Quick overview

Riester 2.0 — officially the new Altersvorsorgedepot — is the planned successor to the old Riester pension. It represents a major reform of Germany’s state-subsidised private retirement saving, designed to start new contracts from 1 January 2027 while preserving full protection for existing Riester contracts. The coalition of CDU/CSU and SPD agreed final details in early 2026 and the reform was put to a Bundestag vote on 26 March 2026.

Key facts at a glance

• Start date for new contracts: 1 January 2027.
• Existing Riester contracts: full Bestandsschutz (full protection).
• No mandatory contribution guarantee for the standard, chancenorientiertes depot.
• Up to 100% investment in equity ETFs allowed.
• Cost cap for standard products reduced to 1% (instead of previous 2–3%).
• Simplified subsidy: 50 cents per euro up to €360 per year, then 25 cents per euro up to €1,800.

The reform shifts the product to a capital-market-oriented depot that allows higher equity exposure and simpler, more targeted subsidies. It aims to be more attractive to families, low earners, the self-employed and anyone willing to take market risk for potentially higher returns.

2. What changed and why it matters

The reform responds to criticism of the old Riester system — complexity, high fees and overly conservative product rules. Riester 2.0 (Altersvorsorgedepot) removes the mandatory capital-protection requirement for the main, opportunity-oriented product, opens broad access to ETFs and lowers cost limits. These changes are intended to reward active saving and make state support more efficient.

Main improvements compared with the old system

1. No mandatory contribution guarantee for the standard depot: providers can offer a chance-oriented product without the old 100% guarantee, which historically limited returns.
2. Higher equity quotas: savers can invest up to 100% in equity ETFs, increasing expected long-term returns.
3. Lower cost cap: standard products are capped at 1% ongoing costs, cutting fees compared with the previous 2–3% range.
4. Simplified subsidy structure: 50 cents per euro for contributions up to €360 per year, then 25 cents per euro up to €1,800 — more intuitive and more generous for common contribution levels.
5. Concrete payout flexibility: the depot allows more flexible withdrawal options than the old rule that required at least 70% to be annuitised.

Last-minute improvements made the proposal significantly more attractive: the basic allowance increases from 30 to 50 cents immediately from 2027; full child allowances of €300 per child become payable from contributions as low as €25 monthly (instead of €100); the self-employed are included; and a publicly offered standard depot is introduced. These changes particularly benefit low earners and families.

3. Subsidies and example calculations

The new subsidy scheme is designed to be easier to understand and to reward regular saving. The headline formula is 50 cents state subsidy for every euro you pay in up to €360 per year, and 25 cents for additional contributions up to €1,800 per year. That makes typical monthly contributions much more attractive under the new system.

Example: monthly €100 contribution

1. Annual contribution: €1,200.
2. Subsidy calculation: first €360 receives 50% → €180; remaining €840 receives 25% → €210; total annual subsidy = €180 + €210 = €390.
3. Compare with old Riester fixed basic allowance: a fixed €175 would have been significantly lower in this example.

Because of the increased subsidy rate at the low end and the higher relative subsidy for common saving amounts, savers contributing typical monthly sums stand to gain noticeably more support than under the old system.

4. Product categories, guarantees and switching rules

The reform creates two clear product categories to match different risk preferences: a chancenorientiertes depot (opportunity-oriented depot) without a guarantee to pursue higher returns via ETFs, and optional guarantee products that preserve 80% or 100% of contributions for savers who prefer protection.

Key product rules

• Opportunity-oriented depot: no mandatory capital guarantee, high equity allocation allowed, lower fees, designed for higher long-term returns.
• Guarantee options: products can offer 80% or 100% contribution protection for savers who want security.
• Distribution of upfront costs: providers must spread initial costs over the life of the contract, reducing front-loaded sales charges.
• Switching: savers can switch between products; rules allow a change after five years without penalising the saver’s accrued rights.

Existing Riester contracts remain fully protected; there is no mandatory conversion. Switching into the new depot is possible without repaying subsidies, but making the optimal choice may require a Günstigerprüfung — a formal assessment to determine which option is more favourable for the saver.

5. Comparison with the old Riester system

In short, the Altersvorsorgedepot aims to combine transparency, lower costs and higher equity exposure for better long-term results. For many savers this means higher expected end balances and clearer product comparisons.

6. Who benefits — and who should be cautious

Winners from the reform include families, low earners, active investors and the self-employed. The immediate increase in the basic subsidy, easier access to child allowances, and allowance qualification at lower contribution levels make the product more attractive for those groups. Brokers and fund providers expect a surge of new customers and a competitive market for providers.

When the old Riester might still make sense

1. Very low earners with several children: under specific circumstances the fixed child allowances of an existing Riester contract can be more favourable if contributions and family structure align with the old rules.
2. Existing contracts with very good terms: full Bestandsschutz applies, so staying can sometimes be beneficial.
3. Savers who strictly refuse any capital market risk: guarantee products with high protection levels remain an option under the new rules.

Those unsure should run a side-by-side comparison and use the official Günstigerprüfung to see which system is more advantageous. A strategic decision could be to sign a Riester contract in 2026 only in narrowly defined cases, since the new depot will be available from 2027.

7. Practical steps to prepare and next actions

If you are considering taking advantage of Riester 2.0, here are pragmatic steps to prepare:

1. Understand your goals: decide whether you want higher long-term returns (equity exposure) or prefer capital protection.
2. Compare costs: look for providers offering the standard depot with low ongoing fees (target: at or below the 1% cap).
3. Check subsidy impact: calculate the new subsidy at your planned contribution level — small monthly contributions now receive a relatively larger state top-up.
4. Consider the child allowance rules and whether the new thresholds help your family situation.
5. If you already have a Riester contract, request a Günstigerprüfung to compare staying versus switching.
6. Plan timing: new contracts start from 1 January 2027; existing contracts remain protected.

In short: Riester 2.0 (Altersvorsorgedepot) makes state-subsidised private retirement saving more flexible, more transparent and potentially more rewarding for many savers — especially those who are comfortable with higher equity exposure and lower ongoing fees. Careful comparison and a clear plan will help you decide whether and when to switch.