The statutory German pension (gesetzliche Rente) is rarely enough to maintain your standard of living in retirement. The Riester pension is a government-subsidised private retirement scheme that tops up your savings with direct allowances and tax deductions. But how much do you actually get? This article works through the numbers.
What is the Riester Pension?
The Riester pension (Riester-Rente) is a state-subsidised retirement savings contract introduced in 2001. The government supplements your contributions with direct allowances paid into your contract and allows a special expense deduction in your tax return.
Those eligible include:
- Employees who are compulsorily insured in the statutory pension system
- Civil servants (Beamte) and judges
- Recipients of unemployment benefit (ALG I) or parental allowance (Elterngeld)
- Spouses of eligible individuals (indirectly eligible)
Important: Compare providers
Riester products vary significantly in costs and returns. Compare several providers and watch for entry and management fees before signing.
Riester Allowances 2026
The state pays money directly into your Riester account — tax-free. There are two allowances:
Basic Allowance: €175 per year
The Grundzulage (basic allowance) has been €175 annually since 2018. It flows automatically into your Riester contract as long as you pay the minimum contribution.
Child Allowance: €185 or €300 per child per year
For each child eligible for child benefit (Kindergeld), there is an additional Kinderzulage:
| Child's birth year | Child allowance per year |
|---|---|
| Before 2008 | €185 |
| 2008 or later | €300 |
A family with two children (born 2012 and 2018) receives: €175 + €300 + €300 = €775 annually from the state — on top of their own minimum contribution.
Minimum Own Contribution: What Do You Have to Pay?
To receive the full allowance, you must pay a minimum contribution (Mindesteigenbeitrag). This is calculated as follows:
Minimum contribution formula
4% of previous year's gross income − allowances = minimum own contribution
Minimum: €60 per year (floor amount)
Example: Gross income €40,000, 1 child (born 2015):
- 4% of €40,000 = €1,600
- Minus basic allowance €175 and child allowance €300 = €475
- Minimum contribution = €1,125/year (= €93.75/month)
If you contribute less, the allowances are reduced proportionally.
Special Expense Deduction: Check Your Tax Benefit
In addition to the allowances, you can claim the total contribution (own payments + allowances) as special expenses in your tax return — up to €2,100 annually.
The tax office automatically checks whether the tax benefit exceeds the allowance benefit (Günstigerprüfung). Only if it does will the additional tax saving be granted — but the allowances always remain. For higher earners without children, this tax effect can be significant.
Example: Annual contribution €1,500 + €175 basic allowance = €1,675 deductible. At a marginal tax rate of 35% = €586 tax refund, minus €175 allowance already received → effective additional tax benefit of €411.
Calculate Your Riester Pension
Use our free Riester Pension Calculator to calculate in seconds:
- Your basic allowance and child allowances
- The minimum contribution for full subsidy
- The deductible total contribution (max. €2,100)
- Projected retirement capital to age 67
- Monthly pension assuming a 20-year payout period
Calculate your Riester subsidies now
Open Riester Pension Calculator →Riester vs. Other Retirement Vehicles
The Riester pension is especially worthwhile for:
- Families with children — the child allowance is a direct cash subsidy
- Lower earners — high subsidy ratio relative to minimum contribution
- Civil servants — fully eligible, no statutory pension as an alternative
For freelancers, higher earners without children, or those with a higher risk tolerance, ETF savings plans or the Rürup pension may be more attractive.
Closing the Retirement Gap
How large is your personal retirement gap? Our Retirement Gap Calculator shows you how much capital you need and how much you must save monthly to maintain your standard of living in retirement.
Those who start early benefit from compound interest. The FIRE Calculator helps plan a concrete savings target and the path to financial independence.
Parents should also check how long they will receive parental allowance (Elterngeld) — Riester allowances continue to apply during parental leave periods.
Frequently Asked Questions
When does the Riester pension pay off?
Whenever you are compulsorily insured and have children. Even for low earners, the subsidy ratio is very high: at low income, the minimum contribution is just €60/year — and you receive €175 basic allowance plus child allowances on top.
What happens if I cancel the contract?
If you cancel, you must repay all state subsidies received. Better option: make the contract contribution-free and leave the accumulated capital to grow until retirement.
Is the Riester pension taxable in retirement?
Yes, payouts are fully taxable as income. Since the tax rate in retirement is typically lower than during working life, this is usually still advantageous compared to paying from after-tax income.
Can I switch Riester providers?
Yes. Changing providers is possible. The accumulated capital — including all allowances — is transferred to the new provider. Transfer fees may apply.