TL;DR
From 1 January 2027, Germany replaces new Riester contracts with subsidized Altersvorsorgedepot products. You save into certified funds, the state adds Grundzulage on top of your contributions, and you pay tax on subsidized portions when you draw income later.
The enacted formula is simpler than the old Riester maze: save at least €120/year, get 50% on the first €360, then 25% up to €1,800 of personal contributions. Maximum basic allowance: €540. Optional extras include a one-time €200 Berufseinsteigerbonus (under 25) and up to €300 Kinderzulage per child.
If you read about a 2029 rate increase, that came from an earlier draft Parliament replaced. The final law has no scheduled 2029 step-up.
Play with the subsidy math
Numbers on a page stay abstract. Drag your contribution and toggle the bonuses to see what the state adds in a single year.
Below €120/year you get nothing. At €300 with one child and the young-entrant bonus enabled, state support can exceed what you put in yourself. That is the point of the reform: strong, legible incentives for small and middle savers.
For a full projection to retirement — balance growth, fees, recurring Grundzulage, and year-by-year chart — use the Altersvorsorgedepot 2027 calculator.
What actually changed in 2027
The reform is enacted law (BGBl. 2026 I Nr. 156, in force 1 January 2027). The BMF FAQ is the clearest plain-language reference.
The big shifts:
- Beitragsproportionale Grundzulage replaces the old fixed €175 allowance tied to complicated income-based minimum contributions.
- No income test for the allowance formula — low earners benefit from the 50% first tier instead of a separate low-income bonus.
- New product world: Altersvorsorgedepot (capital-market oriented, no statutory capital guarantee on the standard depot) and optional guarantee products.
- Old Riester contracts signed before 2027 can continue under old rules, switch irrevocably to the new subsidy, go dormant, or transfer.
Tax treatment stays broadly familiar: subsidized contributions plus allowances can qualify for Sonderausgaben relief (whichever is better vs. the allowance), gains compound tax-free in the depot, and subsidized portions are fully taxed on payout.
The Grundzulage tiers (enacted formula)
| Your annual contribution | State Grundzulage | |---|---| | Below €120 | €0 | | €120 – €360 | 50% of what you save | | €360.01 – €1,800 | 50% on first €360 + 25% on the rest | | Above €1,800 (up to €6,840 allowed) | Max €540 Grundzulage; extra savings not subsidized |
Example at €1,800/year personal contribution:
- 50% × €360 = €180
- 25% × €1,440 = €360
- Total Grundzulage = €540
That is a 30% effective match on the full €1,800 — strong, but front-loaded toward smaller contributions where the 50% tier dominates.
The €200 Berufseinsteigerbonus
If you have not yet turned 25 at the start of the contribution year, meet the €120 minimum, and have not received the bonus before, the state adds a one-time €200 to your Grundzulage that year.
It is not annual. It is not automatic if you skip the minimum contribution. It rewards an early start, not just being young on paper.
Kinderzulage (child bonus)
For each child with Kindergeld assigned to you:
- You receive 100% of your personal contribution as Kinderzulage
- Capped at €300 per child per year (reached at €25/month)
- Normally tied to the parent receiving Kindergeld; married parents can transfer it
Two children and €250/month in personal savings can mean €600 in Kinderzulage alone — before Grundzulage.
Our long-term calculator treats Kinderzulage as a current-year toggle only. Kindergeld eligibility changes over a lifetime; assuming the same child count until retirement would overstate the benefit.
Why you still see "2029" in older articles
The December 2025 government draft proposed 30% on the first €1,200, rising to 35% from 2029, plus 20% through €1,800. Some BMF materials from early 2026 still mention that timeline.
Parliament changed the formula before enactment. The law that passed uses 50% / 25% with no 2029 rate increase. When you compare calculators or news pieces, check whether they cite the draft or BGBl. 2026 I Nr. 156.
Frühstartrente is separate
You may also hear about Frühstartrente: the state paying €10/month into a child's Standarddepot from age 6 to 18. As of August 2026 that was still a pending legislative proposal, not part of the enacted adult reform.
Do not mix Frühstartrente projections into an adult subsidy model unless you label them explicitly as proposed law.
Costs, payouts, and existing Riester
Standarddepot products face a 1% effective cost cap. Non-standard depots have disclosure rules but not the same cap. Transfers may cost up to €150 within five years; after five years, outgoing transfers must be free in many cases.
At retirement (generally 65–70), you choose a lifetime annuity or scheduled withdrawals until at least age 85, with up to 30% lump sum at start. Subsidized portions are fully taxed; unsubsidized capital can receive more favorable Ertragsanteil treatment.
Already in Riester? You are not forced to switch. But new Riester-style contracts after 2026 are off the table — the new depot world is the forward path.
A practical way to use this
- Decide your realistic annual contribution (€10/month = €120 minimum; €150/month hits the subsidized cap).
- Check whether €200 or Kinderzulage apply in your first year.
- Model return and product cost conservatively — the 1% cap helps, but markets are not smooth.
- Compare against doing nothing or an unsubsidized depot only if you will never claim allowances.
- Revisit once a year; this is policy-heavy and providers will compete on fees and fund menus.
Why this matters for long-term planning
Germany's third pillar finally reads like a savings match ordinary people can understand. The highest subsidy rates sit exactly where many households can actually save: €120 to €360 per year.
That also means the difference between €100 and €120 is not marginal — it is the line between zero and meaningful state support.
If this helped the rules click, change the inputs in the embed above, then run your own ages and horizon in the full calculator. Educational estimate only — not tax or legal advice. For binding details, use the BMF FAQ and professional advice for your situation.