Klara’s €825 own payment keeps the old allowances in reach
Klara earned €40,000 of pension-insurable pay in 2025 and has two children born after 2007 who meet the child-benefit condition. For her 2026 Riester contribution, 4% of last year’s pay is €1,600. The old-rule basic allowance of €175 and two child allowances of €300 each total €775. Under these assumptions, Klara’s own contribution needed for the full old allowances is €1,600 − €775 = €825 for the year. Paying €825 may matter more than buying a new product before the reform.
The German pension insurance authority’s Riester subsidy guide sets out the 4% of prior-year relevant income, €2,100 maximum total, €175 basic and €185/€300 child rules. It also says a lower own payment can reduce the allowances proportionally. Klara’s example depends on her actual eligibility, the correct prior-year income, a valid child allowance and her contract. It is a contribution check, not a promise that a 2026 Riester policy will earn a particular investment return.
The 2026 calculation has four moving parts
For someone directly entitled to old Riester funding, the full-allowance target is usually the smaller of 4% of prior-year pensionable income or €2,100, less applicable basic and child allowances, with at least €60 of own annual contribution. The child allowance normally follows the person entitled to Kindergeld and contract allocation rules. A salary change in 2026 does not replace the 2025 income used in this contribution calculation. The official Riester calculator can be used to check the actual data.
| Klara’s 2026 old-rule item | Euros |
|---|---|
| 4% of 2025 income (€40,000) | €1,600 |
| Less basic allowance | −€175 |
| Less two post-2007 child allowances | −€600 |
| Own payment for full allowances under assumptions | €825 |
Klara’s €1,600 old-rule annual saving target
Do not assume every family gets the same result. At a much lower income, the €60 own minimum can bind. A child born before 2008 can attract €185, not €300. A missing Kindergeld entitlement or a contract that does not have the correct Zulagenantrag can alter the amount actually credited. The ZfA funding page explains those distinctions. Save your previous-year income figure, 2026 payslips, child-benefit records and provider contribution statement before changing direct debits.
The reform gives three choices, not one mandatory transfer
The private-pension reform passed in 2026 and allows new products from 1 January 2027. The Federal Finance Ministry says existing Riester contracts have grandfathering and can continue with the old subsidy and their original contract terms. An owner may also keep the old contract but elect the new subsidy rules, leaving other contract conditions in place. A third path is a transfer to a new certified product, including an Altersvorsorgedepot or guarantee product, without repaying previously received subsidies. That transfer can still produce switching, acquisition or distribution costs, and a new product can have different risk and payout terms. The Finance Ministry FAQ also says an election into the new tax-subsidy system cannot be reversed back to the old funding. Opening a separate new contract can end old-contract grandfathering, so obtain the provider’s written treatment before making either change.
The subsidy arithmetic can change without assuming any investment return. If Klara contributes the same €825 under the new proportional scheme in 2027 and remains directly eligible with the same two children, the basic subsidy would be €180 on the first €360 plus €116.25 on the next €465, or €296.25. Each child can still produce up to €300 at Klara’s own contribution level, for €600 combined and €896.25 total new-system subsidy. That is €121.25 more than the old €775 on this one assumed annual payment. The new rules use different eligibility, contribution and tax mechanics. The number does not prove that a transfer or subsidy election is better after contract fees and guarantees.
One-year subsidy on Klara’s €825 own contribution
The Riester-ZfA comparison FAQ shows how old and new funding can differ with income and children. It includes an example where the new subsidy is lower on a small own contribution despite two children. That is a useful warning against blanket “everyone should switch” advice. Compare your own payment amount and number of eligible children, not only the new maximum basic allowance of €540.
Fees, guarantees and taxes can reverse the headline result
Old Riester contracts can contain 100% contribution guarantees at the start of retirement and contract-specific annuity terms. A new guarantee-free depot accepts investment loss risk; a Standarddepot has a 1% effective-cost ceiling, but the BMF applies that ceiling specifically to the Standarddepot, not every new depot. A switch from old Riester could reduce or remove a guarantee. Ask both providers for written effective costs, transfer charges, current surrender or transfer value, investment restrictions and projected payout terms before treating €121.25 of possible annual subsidy difference as a net gain.
The old Riester tax deduction limit and subsidy can interact through the tax office’s favourable-treatment test. Subsidies enter the contract, while any additional tax advantage from the deduction is calculated on the tax return. A fixed “return on your own contribution” that ignores future pension taxation, product fees and payout duration is not an investment comparison. The BMF’s current FAQ makes clear that old contracts can remain and that transfers may cost money. A saver near retirement may value a guarantee differently from Klara, who has decades left.
A practical 2026 review before the January change
First confirm that your 2026 own contribution will meet the old-rule minimum needed for your expected allowance. The source is 2025 relevant income, not a generic monthly salary. Second, check who receives each child allowance and whether the provider’s subsidy authorisation is current. Third, obtain the contract’s current effective-cost and payout statement. You can then compare three actual paths for 2027: keep old rules, keep the contract with new subsidies, or transfer to a quoted new product.
The child allowance assignment makes a material difference to Klara’s arithmetic. If both €300 child allowances belong to her spouse’s eligible contract instead, Klara’s own full-allowance target would be €1,600 − €175 = €1,425, assuming the same income and her own basic allowance. A direct debit of €825 would then be short by €600. Checking which parent is credited avoids mistaking a correct family-wide subsidy for the wrong individual contract amount.
The German pension-insurance service confirms that the reform leaves existing Riester contracts in force. If the old plan has unusual guarantees or a low transfer value, an extra subsidy in one year may not justify a move. Klara’s €825 check is useful precisely because it can be done from records she already has before any provider sells her something new.
