540 euros in funding per year initially sounds like a decent offer, and anyone who makes private provision for old age and receives additional money from the state for doing so has, at first glance, a real advantage over a normal securities account. But retirement provision has already been sold in Germany in exactly this way. With Riester, the subsidy was at the center; the actual reckoning came later: high costs, complicated contracts, rigid guarantees and, in the end, many savers wondering why so little remained of the good idea.
The planned Altersvorsorgedepot is supposed to do many things better from 2027 onward: more capital market, more funds and ETFs, less guarantee thinking. This comes late, because Germany spent far too long acting as if private retirement provision were only sensible when every euro paid in was nominally guaranteed. For people who save for 30 or 40 years, this insight has often become costly. The promised safety took away many return opportunities.
Nevertheless, the new reform should not be celebrated too early. An Altersvorsorgedepot is not automatically good retirement provision just because funds and ETFs appear in it. The real calculation only begins after the headline: How high are the costs? How free does the money remain? How will it be taxed later? Which products are offered, and how much of the state subsidy actually ends up with the saver rather than with the provider?
The end of Riester is long overdue
Riester did not fail because the state supported private provision. Support can be sensible if it gets people to build wealth regularly. Riester failed because of the German mixture of promises of security, distribution, bureaucracy and costs. The contribution guarantee was reassuring for many savers, but became a problem especially in the low-interest phase. Providers had to present guarantees, build in hedges and construct contracts in such a way that nominal security became more important than real purchasing power in old age.
For long-term provision, that is actually secondary: someone who starts saving for old age at 30 does not need the same security as someone who needs the money in two years. Fluctuations on the stock market are unpleasant, but over long periods they are not automatically the greatest risk. Far more dangerous is provision that generates too little return after costs and inflation over decades.
The Altersvorsorgedepot starts exactly at this point. It is intended to make subsidized products possible without a classic contribution guarantee. Guarantee variants are still planned alongside it, for example with 80% or 100% contribution preservation. This choice alone is progress compared with the old Riester logic. The state thereby acknowledges that long-term retirement provision can hardly be thought of sensibly without the capital market anymore.
The subsidy sounds stronger than it is on its own
According to the plans of the Federal Ministry of Finance, the subsidy is to become simpler than with Riester. For the first 360 euros of personal contribution per year, the state adds 50 cents for each euro paid in. For further contributions up to a total of 1,800 euros annually, 25 cents per euro are planned. This results in a maximum basic allowance of 540 euros per year. Anyone who saves for the long term anyway will gladly take this subsidy. Of course, the subsidy is not a return guarantee. It is only additional money that flows into a specific retirement provision system. Whether this becomes a real advantage depends on what this system costs and which restrictions are connected with it.
This is exactly where the design flaw already lay with Riester. Too much attention was paid to the allowance and too little to what happens in the contract over decades. In retirement provision, small differences work brutally long. One percentage point higher costs sounds harmless in a single year. Over 35 or 40 years, however, this can consume a considerable part of the subsidy. That is why the Altersvorsorgedepot must be calculated against a normal ETF savings plan, not only against Riester. A free securities account receives no allowance. But it can be very cheap, remains easier to understand and is not tied to a state-defined retirement framework.
The state shifts the tax, but does not abolish it
Another advantage of the Altersvorsorgedepot lies in the accumulation phase. Returns there are not to be taxed continuously. Dividends, distributions and realized gains can remain in the system and continue working. Over long periods this can make a difference, because capital is not constantly removed from the investment process through taxes. But taxation does not disappear entirely; it is simply shifted into the future.
According to the federal government’s current plans, benefits will later be taxed in the payout phase. That can work out well if the personal tax rate in old age is lower than during working life. But it can also be less attractive if additional income exists, tax laws change or later taxation turns out differently than assumed today. Anyone who pays into an Altersvorsorgedepot at the age of 30 is making a decision for a period in which several governments, tax reforms and budget crises may occur. The state creates an incentive today and at the same time retains the ability to change the framework politically in the future. Here, only certainty creates trust.
A normal securities account also has tax disadvantages. Capital income is taxed, advance lump sums may arise, and when selling, gains become directly subject to levies.
The 150-euro limit shows how limited the reform remains
The maximum subsidy for the personal contribution ends at 1,800 euros per year. That is 150 euros per month. For many households, this is a serious amount, especially after rent, energy, groceries, insurance and mobility. For a large pension gap, it is still little, especially when one starts later. An employee who later needs several hundred euros more per month will not solve this problem through a subsidized monthly rate of 150 euros alone. Over long periods, this can become a decent amount of wealth with capital-market returns, especially if costs remain low. But the Altersvorsorgedepot replaces neither a sustainable statutory pension nor comprehensive private wealth building.
The reform is therefore more of an admission than a liberation. The state is indirectly saying: the old retirement provision world is no longer enough; the capital market must play a stronger role. At the same time, the subsidy remains limited and the money politically framed. Germany dares to use stocks, but only within an administered corridor.
Neobrokers can help
The new reform is also interesting because digital brokers and platforms can approach the market differently from insurers and traditional banks. Many people no longer know ETF savings plans from advisory meetings, but from apps. A savings plan can be set up quickly, amounts are low and the interface is simple. This has significantly lowered the entry threshold for investing – especially among young savers.
For the Altersvorsorgedepot, that can be good. If a subsidized product becomes simpler, cheaper and more transparent than old insurance contracts, much would be gained. Especially people who never understood Riester or never took one out could be more likely to get into regular saving through a familiar digital access point. Neobrokers such as Scalable Capital* or Trade Republiic* have kept their cost structures tight anyway and can pass these on despite the PFOF ban , ultimately creating a cheap and solid basis for the Altersvorsorgedepot.
Both have already announced that they will offer corresponding products from 2027 onward. We are curious!
