Reform of Private Retirement Savings Starting in 2027: What Will Change for Savers and the Self-Employed
State-subsidized private retirement savings have long been considered complicated, low-yield, and unattractive. The Retirement Savings Reform Act will fundamentally overhaul the system starting in 2027. The changes affect product design, the subsidy structure, and the group of eligible participants. For anyone who already has a Riester plan or is considering joining the subsidized retirement savings program, it’s worth taking a closer look at the changes.
Higher Returns Through New Guarantee Options
Until now, providers of subsidized retirement savings plans were required to guarantee at least the total of contributions and government subsidies paid in at the start of the payout phase. This full guarantee meant that providers predominantly relied on conservative, low-return investment options. Starting in 2027, savers will have the choice between three guarantee levels: no guarantee, an 80 percent guarantee, or the previous full contribution guarantee. Those who opt out of the guarantee entirely or in part can invest more heavily in higher-yielding assets such as equity funds or ETFs—with correspondingly higher potential returns over long investment horizons.
The New Standard Account: Simple, Affordable, Digital
A so-called standard account is being introduced as a new basic product. It is aimed at people seeking a straightforward solution without individual advice. The standard account features a preset investment strategy, can be opened entirely online, and is subject to a statutory cost cap of 1 percent of the effective costs per year. Providers of subsidized retirement savings plans will be required in the future to include at least one such standard account in their offerings.
Simpler subsidies with higher support for small contributions
The previous allowance system was tied to income—a factor that made the process unnecessarily complicated. Starting in 2027, a new, contribution-based model will take effect. For every euro of personal contributions up to 360 euros per year, the government grants a 50-cent basic subsidy. For additional personal contributions up to a total of 1,800 euros, an additional 25 cents per euro is added. The maximum basic subsidy is thus 540 euros annually.
Families also receive a child allowance: For each euro of personal contributions, an additional euro is granted per child as a child allowance, up to a maximum of 300 euros per child per year. The minimum personal contribution required to receive any allowances will be 120 euros per year.
For those just starting their careers, the one-time bonus of 200 euros remains in place. It is granted regardless of the amount of personal contributions, as soon as the minimum contribution has been paid.
Special expense deduction remains, but becomes more transparent
The interplay between allowance support and the tax deduction for special expenses will generally remain in place. However, the calculation will be easier to understand: In the future, the allowance entitlement will be added to the maximum subsidized personal contribution of 1,800 euros, making the actual maximum deduction amount easier to track.
Self-Employed Individuals Now Eligible for Subsidies for the First Time
One of the most significant changes concerns the group of people eligible for subsidies. Until now, Riester subsidies were primarily available to employees, civil servants, and certain other groups. Self-employed individuals were generally excluded. Starting in 2027, self-employed individuals and members of professional pension schemes—such as self-employed doctors, lawyers, or architects—will also be included in the group eligible for subsidies. Starting in 2028, cross-border commuters who work abroad but are subject to taxation in Germany will also be included.
Fewer Additional Options, More Flexibility When Switching
For new contracts starting in 2027, supplementary coverage against reduced earning capacity or for the benefit of surviving dependents will no longer be available. However, those who wish to provide for their survivors can agree on a guaranteed pension period when taking out a life annuity. At the same time, switching and origination fees will be more strictly regulated to make it easier to switch providers. The previously mandatory conversion of remaining capital into an annuity starting at age 85 for payout plans will also be eliminated.
What applies to existing Riester contracts?
Anyone who already has a Riester contract can rest assured: Existing contracts are grandfathered and can continue under the previous system. However, switching to the new subsidy regime is possible upon request. Important to note: A combination of the old and new systems is not permitted—the decision applies uniformly going forward.
What does this mean for you?
The reform offers significantly more flexibility than the previous system. Those with a long investment horizon who can tolerate market fluctuations will benefit from the new options without a contribution guarantee. For the self-employed, this marks the first time they have access to government subsidies. At the same time, the new options also increase the need for advice—particularly regarding which guarantee level and which product best suits one’s personal life situation.
About Trimborn . Partner
Trimborn . Partner is an established tax consulting and auditing firm with offices in Düsseldorf and Oberhausen. As experienced tax advisors, we assist employees, self-employed individuals, and freelancers with the tax optimization of their retirement planning—from Riester subsidies and special expense deductions to employer-sponsored retirement plans. If you’d like to know how the reform affects your personal retirement planning, our tax advisory experts in Düsseldorf and Oberhausen are happy to assist you.
