Pension savings account 2027: What the new stock pension means for your finances
Starting January 1, 2027, Germany’s old-age provision will change fundamentally. The new retirement savings account makes it possible for the first time to invest in ETFs and stocks with state support — tax-free, flexible, and with attractive subsidies. On March 27, 2026, the Bundestag passed the law affecting around 50 million people in Germany.
No investment advice: This article is solely for informational purposes and does not constitute investment advice. Please consult an independent financial advisor before making any investment decisions. Capital investments carry risks — the invested amount can decrease in value.
What is the retirement savings account?
The retirement savings account is a new, state-subsidized investment product that replaces the previous Riester pension. The key difference: Instead of flowing into expensive insurance products with guaranteed interest, the money goes directly into ETFs, stock funds, or individual stocks. The return remains tax-free throughout the savings phase — no final tax, no capital gains tax on dividends or price gains.
The principle is simple: You open a brokerage account with a bank or broker of your choice, regularly contribute funds, and benefit from government subsidies. Taxation only occurs upon withdrawal in retirement — at that point, however, it is often at a significantly lower tax rate than during your working life.
How to get started? Step by step
- Inform yourself: All providers will introduce their products from the end of 2026. Now is the time to compare conditions.
- Choose a provider: Pay attention to low account fees, a wide selection of ETFs, and transparent cost structures (TER under 0.3% recommended).
- Open an account: Starting from January 1, 2027, apply online directly — with banks, online brokers, or insurance companies.
- Make the minimum contribution: As little as 120 euros annually (10 euros per month) secures you the full basic subsidy of 540 euros.
- Submit a subsidy application: This is usually handled automatically by the provider — apply once, and it will be processed automatically each year.
- Set up an ETF savings plan: A world ETF (MSCI World or FTSE All-World) is recommended as a core investment.
- Annually check: Child allowances, special expense deduction up to 3,000 euros/year in the tax return.
The Best Provider Types at a Glance
| Provider Type | Costs (approx.) | Suitable For | Special Feature |
|---|---|---|---|
| Direct Broker | 0–0.99 % p.a. | Self-employed investors | Maximum ETF selection, cheapest fees |
| Local Bank / Savings Bank | 0.5–1.5 % p.a. | Those in need of advice | Personal advice included |
| Insurance Company | 1–2 % p.a. | Combination savers | Pension and life insurance coverage combinable |
| Robo-Advisor | 0.5–1 % p.a. | Passive investors | Automatic rebalancing, full management |
Overview of Allowances: Up to 840 Euros Annually
| Allowance | Amount per Year | Requirement |
|---|---|---|
| Basic Allowance | 540 Euro | Minimum contribution 120 Euro/year |
| Child Allowance | 300 Euro per child | Child benefit entitlement |
| Entry Bonus | 200 Euro (one-time, 3 years) | Under 25 years at start of contract |
Calculation example: A 30-year-old employee with two children pays in 120 Euro and receives 1,140 Euro in state allowances — with only 10 Euro monthly contribution. Over 30 years this results in more than 100,000 Euro with a 7 % ETF return.
Return Potential and Risks
The historical average of broad global ETFs is 7–8 % annual return (after costs, before taxes). The retirement savings account benefits additionally from the tax-free saving phase and the state allowances — a significant return booster compared to private ETF savings plans.
- Price fluctuations: Stock markets can fall by 30–50 % in individual years. Those who invest long-term (15+ years) statistically even out downturns.
- Inflation risk: With low returns, inflation can erode the real value gain — ETFs historically offer the best protection here.
- Provider risk: Accounts are subject to German deposit insurance (securities are special assets and not affected by insolvency).
- Legislative risk: Changes to tax rules or subsidies are possible — as seen with the Riester pension.
Tax Aspects in Germany
The retirement savings account uses the principle of deferred taxation: No taxes are due during the saving phase. Only upon withdrawal in old age does the personal income tax rate apply — which is significantly lower than the employment tax rate for most retirees.
- Special expense deduction: Up to 3,000 euros annually deductible.
- No final tax during the saving phase: Dividends and capital gains remain tax-free as long as the money stays in the account.
- Exemption order: Applies only to regular accounts (saver’s allowance of 1,000 euros per year) — not relevant for the retirement savings account.
- Capital gains tax upon payout: A life annuity or partial payout is taxed at the individual’s tax rate.
Avoid Common Mistakes
- Starting too late: Every year of waiting time costs thousands of euros in return due to the compounding effect.
- Contributing too little: Only 120 euros per year qualify for the basic allowance — but contributing more is usually worthwhile.
- Forgetting the child allowance: Parents must submit a separate allowance application for each child.
- Choosing expensive products: Management fees over 1 % p.a. eat up a significant portion of the return in the long run.
- Letting the Riester contract run its course: Check existing contracts for costs and return — switching is often sensible.
- Withdrawing too early: Early withdrawal leads to the repayment of all allowances plus tax liability.
- Trying to time the market: Regular contributions (cost-average effect) beat any market timing in the long run.
- Knowing only one provider: Compare at least three offers before concluding a contract.
Who benefits from the retirement savings account?
| Investor Type | Benefit | Recommendation |
|---|---|---|
| Entry-level professionals under 25 | Entry-level bonus of 200 euros/year (3 years) + 40+ years of compound interest | Start immediately, minimal own contribution |
| Families with children | Child allowance of 300 euros/child/year | Separate account for each parent |
| Self-employed individuals | Eligible for subsidies for the first time (previously excluded from Riester) | Ideal as a retirement alternative |
| Employees with Riester | Renegotiation of old, expensive contracts possible | Check costs, possibly switch |
| Savers over 50 | Tax-free remaining term plus allowances | Also meaningful with a 15-year term |
Video: Wealth building vs. retirement provision explained
The difference between private wealth building and subsidized retirement provision — and which strategy is more sensible at which time:
FAQ: Frequently asked questions about the retirement provision account
Can self-employed individuals also use the retirement provision account?
Yes — this is one of the most important changes compared to the Riester pension. Self-employed individuals will be eligible for subsidies for the first time in 2027 and will receive the same subsidies as employees.
What happens to my money if I die before retirement age?
The balance flows into the estate. Heirs must repay the accumulated tax benefits and subsidies proportionally, unless risk protection was also covered.
Which ETF should I save in my retirement savings account?
Financial experts recommend broadly diversified global ETFs such as the MSCI World or FTSE All-World with a TER below 0.3%. These cover 1,500 to 3,500 companies worldwide.
Can I cancel the retirement savings account at any time?
Technically yes — but all received subsidies and tax benefits must be repaid (misuse). An early withdrawal is only worthwhile in rare cases.
How much do I have to contribute at minimum?
The minimum contribution for the full basic subsidy is 120 euros per year (10 euros per month). If the contribution is lower, the subsidy is reduced proportionally.
Weitere Informationen: Video-Tipps zu Investieren und Rente | Immobilie als Kapitalanlage | Crowdinvesting in Immobilien | Voraussetzungen für den Vermögensaufbau
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