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Germany Kills the Riester Pension, Replaces It with an Equity Depot
The Bundestag passed the Pension Reform Act on 27 March, replacing the failed Riester system with the Altersvorsorgedepot (AVD), a capital market-based retirement account launching 1 January 2027. The key shift: the old mandatory contribution guarantees are gone.
For the first time, German savers can invest state-subsidized pension contributions directly into equities, ETFs, and funds without an insurance wrapper.
The government matches contributions up to €540 per year, with a higher 50% match rate for small savers. A state-managed sovereign fund (modeled on Sweden's AP7) was added as a last-minute amendment.
Every child aged 6 to 18 will also receive €10 per month into a capital market account via the "Fruhstart-Rente." No new Riester contracts permitted from 2027.
The Bundesrat still needs to approve, but passage looks near-certain.