The German Bundestag has passed comprehensive reforms to the country's private pension system. With support from the grand coalition of Christian Democrats and Social Democrats, parliament voted on Friday to replace the Riester pension with a new state-subsidized savings model beginning in 2027. The reform aims to introduce a simplified standard product with capped administrative costs, making private retirement planning more accessible for low-income workers.
The Left Party voted against the government coalition's proposals, while the Greens and Alternative for Germany abstained from voting. The reform package now moves to the Bundesrat for final consideration.
Federal Finance Minister Lars Klingbeil of the SPD described the reform as "a real milestone" shortly before the parliamentary vote. He emphasized that the changes would make private pension savings more attractive for households with smaller incomes and families. "It is now really worthwhile from the first euro," the minister stressed.
The legislation introduces a retirement savings account without guarantee requirements, allowing investments in funds or other asset classes. Pension contracts can now be concluded as simplified standard products offered by a public provider. The specific details of implementation will be determined through subsequent regulatory frameworks.
Under the reformed Riester pension starting in 2027, savers will receive 50 cents from the state for every euro contributed, up to a maximum of 360 euros in basic allowance. For annual savings contributions between 360 and 1,800 euros, the state subsidy amounts to 25 cents per euro. The child allowance of 300 euros per year can be claimed with savings contributions as low as 25 euros monthly.
The total costs for all standard depots over the entire contract period will be capped at one percent of effective costs. The reform also expands eligibility to include self-employed individuals in the circle of those entitled to subsidies.
From breaking news to thought-provoking opinion pieces, our newsletter keeps you informed & engaged.
