Do you have a Riester-Rente (state-subsidised private pension)? Then the enacted reform of private retirement provision from 2027 concerns you directly. The old Riester world is being rebuilt, and the most common question in my conversations right now is: what actually happens to my existing contract?
The short answer. Your Riester contract won't vanish overnight. Existing contracts keep running and stay protected. What's new from January 2027 is a state-subsidised Vorsorgedepot (a fund-based retirement-savings account) with more investment freedom and less rigid guarantees. Sitting still is still no strategy, though: now is the time for an honest look at what your old contract really costs and delivers.
What changes from 2027
For years, Riester has been seen as over-regulated, expensive and weak on returns. That's exactly where the reform comes in. Instead of the familiar contracts with a 100 percent contribution guarantee, a subsidised Vorsorgedepot arrives: more broadly diversified, fund-based, with a state subsidy on your contributions.
The core in three points:
- More investment freedom: instead of rigid guarantees, a larger share may work in investment funds, which raises the return potential over the long term.
- Support via a subsidy: the state adds something on top of every euro you pay in. For the first 360 euros of your own contribution per year you get 50 cents of subsidy per euro paid in, for further contributions up to 1,800 euros a year 25 cents per euro. That caps out at 540 euros of support a year (as at 08/2026, source: Federal Ministry of Finance FAQ on the private pension reform).
- Three product variants: you can choose the Vorsorgedepot with no guarantee at all, or one of two guarantee products with 80 or 100 percent capital preservation (as at 08/2026, source: BMF FAQ, see above).
- Grandfathering: if you already have a Riester contract, you don't lose the state allowances you've received so far. The basic allowance under the old model stands at 175 euros a year (as at 08/2026, § 84 EStG).
Important for context: the Altersvorsorge-Reformgesetz (private pension reform act) has been enacted. The Bundestag passed it on 27 March 2026, the Bundesrat approved it on 8 May 2026 (Federal Ministry of Finance). The new products launch in January 2027. Still open is the so-called Frühstart-Rente for children and young people: that sits in a separate draft bill and has not been passed. As at 08/2026.
What this means for your old contract
A model case helps here. Take an employee, 40, who has been paying into a Riester contract since 2010 and collects the full basic allowance of 175 euros every year for it. Over these 16 years, that's 2,800 euros of gifted money from the state alone, plus possible child allowances.
These allowances are safe. They don't fall away just because a new model is coming. The real question is a different one: how much of the return does your old contract eat up again through acquisition and administration costs? With many older contracts, that's exactly the sore point.
An honest take: not every old contract is bad, and not every new model is automatically better. A well-performing contract with many collected allowances can still be worthwhile. An expensive contract with weak returns, on the other hand, is a candidate for review. Your situation decides that, not the headline.
What belongs in an honest review:
- Costs: what do you really pay for acquisition and administration?
- Guarantee and return: how much contribution guarantee is built in, and how much return potential is left on the table because of it?
- Flexibility: does the contract still fit your life situation, or is it just lying idle?
- Alternative: does building up through funds, for example via a Vorsorgedepot or a broadly diversified fund solution, get you closer to your goal?
Riester, pension and your real gap
Whether an old or new contract: both are only one building block. The statutory pension remains a foundation, not a full programme, and even after the 2026 pension increase the reform doesn't change that. Before you think about the right product, you should know the size of your provision gap. That's exactly what my pension gap calculator is for: gross salary in, estimated net pension out, gap visible.
How you close this gap step by step, I've described in detail in calculating your pension gap, in retirement planning for the self-employed and around building wealth with funds. If you want to sort out where you stand in general, the overview on my retirement planning page helps.
So the reform is no reason to rush. It's a good occasion to work through your retirement provision cleanly once, instead of continuing to pay in blindly.
Frequently asked questions about the 2027 Riester reform
Will my Riester contract be converted automatically in 2027?
No. Under the enacted law, existing contracts keep their grandfathered status and carry on. The allowances you've already received are preserved. Switching to a new Vorsorgedepot would be a decision you actively make, not an automatism.
Is Riester even still worth it now?
That depends on your specific contract. If you've collected allowances and tax advantages over the years and have a low-cost contract, you often continue to do fine. With expensive old contracts that are weak on returns, on the other hand, a sober comparison with fund-based alternatives is worthwhile.
What exactly is the subsidised Vorsorgedepot?
It's the legally enacted successor to the classic Riester world, launching in January 2027: a fund-based account with a state subsidy, more investment freedom and less rigid guarantees. The goal is that more of your money may work long term in broadly diversified investment funds, instead of being stuck in an expensive guarantee.
Should I cancel my contract hastily now?
Please not on a gut feeling. Cancelling can cost you allowances and tax advantages and is rarely the best first step. It makes more sense to lay the contract out with its costs, guarantee and return, and only then decide whether to stay, adjust or switch.
Eduard Strekert is a financial advisor for Deutsche Vermögensberatung AG (DVAG), tied agent. This article is general information and does not replace personal advice. It does not constitute investment or tax advice.