German Bundesrat approves new private pension scheme to replace Riester-Rente from 2027
Germany's Bundesrat on Friday approved a government bill to replace the Riester-Rente with a new state-subsidized private pension model from 2027. The reform introduces new pension depots, including a state standard depot, and removes the capital guarantee that required at least the sum of contributions to be paid out. The Bundesrat welcomed the reform but urged the government to examine whether a sustainable investment option can be included in the standard product.
Germany's Bundesrat on Friday approved a government bill to replace the Riester-Rente with a new state-subsidized private pension model from 2027, clearing the way for the legislation to take effect.
The bill, originating from the Federal Ministry of Finance, introduces new pension depots including a state standard depot. Private providers will be required to offer a standard product for the new savings model, with costs capped at 1% of the average annual return. The reform removes the capital guarantee that previously required at least the sum of contributions to be paid out at retirement, a change intended to allow higher potential returns through riskier investment options.
In an additional resolution adopted alongside the approval, the Bundesrat welcomed the reform but urged the federal government to examine whether a sustainable investment variant can be included in the standard product. The Riester-Rente, which the new model replaces, had been criticized for high administrative costs and low returns, making it increasingly unattractive to savers.
The new system aims to encourage more people to save privately for retirement alongside the state pension. The state will support savers with allowances under the reformed framework.