Why This Decision Matters Now
With the Altersvorsorgedepot launching in 2027, Riester is being wound down for new customers. If you already hold a Riester contract, a very common situation for expats who took advice from a bank in their first year in Germany, you now face a three-way choice: keep it, pause it, or migrate it.
Getting this decision right is worth thousands of euros over the remaining working life. Getting it wrong locks you into high fees for another 20 years.
Option 1: Keep Your Riester Running
Riester still makes sense in a small number of cases:
- The contract is a low-cost fund-based Riester (rare, check the effective TER)
- You are close to retirement (say, 55+) and have already secured most of the tax advantages
- You receive the full state and child subsidies and actually use them each year
In most other cases, the combination of high fees and forced annuity payout means the contract quietly underperforms even a plain ETF savings plan.
> Reality check: Ask your provider for the Effektivkosten (effective cost). Anything above 1.2% per year permanently drags your net return.
Option 2: Pause the Contract (Beitragsfreistellung)
Making a Riester contract *beitragsfrei* means you stop paying in but keep the existing capital and guarantees. This is often the best move when:
- Fees are high but the contract's guaranteed value is significant
- You would otherwise pay in only to unlock the subsidy, and the fee drag eats it up
- You want to redirect the monthly budget into the new Altersvorsorgedepot from 2027
Pausing is reversible in most contracts and keeps the tax treatment intact. It's the default recommendation for the majority of expats we advise.
Option 3: Migrate Into the Altersvorsorgedepot (from 2027)
The draft law explicitly provides for transfer of existing Riester capital into the new depot. Details will be finalized before launch, but the direction is clear:
- Migration should be tax-neutral (no clawback of prior subsidies)
- The transferred capital enters the new depot's cost and payout regime
- You gain access to ETFs and flexible payout instead of a low-yield insurance annuity
For expats with high-cost insurance-based Riester, this is likely the single most impactful move available in 2027.
Decision Framework for Expats
Ask yourself these questions in order:
- Do I still plan to be in Germany or the EU/EEA long-term?
→ No: usually pause; migration may not be worthwhile.
→ Yes: continue to question 2.
- Is my Riester a fund-based, low-cost contract (Effektivkosten < 1.2%)?
→ Yes: keep it running for now, reassess after 2027.
→ No: continue to question 3.
- Is the existing contract value significant (e.g. > €10,000)?
→ Yes: pause it and plan for migration in 2027.
→ No: pause it and let the new depot become your main vehicle.
Use our retirement gap calculator to see how much of your target pension the new depot has to cover, that number drives your monthly contribution decision more than the old contract does.
Common Mistakes Expats Make
- Cancelling Riester completely, this can trigger repayment of past subsidies and tax advantages. Almost never the right move.
- Signing a new Riester contract in 2026, locks you into a soon-to-be-obsolete product; the depot is the future.
- Waiting until 2027 with no plan, you lose 12 months of setup work; better to model options now.
- Ignoring bAV in parallel, company pensions are unaffected by the Riester reform and remain a strong tax lever.
Related reading: Retirement planning for expats in Germany and our ETF investing guide.
What to Do This Year
- Pull out your Riester paperwork and note the Effektivkosten, current value, and guaranteed payout.
- Decide *now* which of the three options fits, don't wait for the 2027 launch chaos.
- Free up monthly budget so you can hit the full state subsidy in the new depot from day one.
- Book a check-in with an English-speaking advisor who has seen both old and new regimes.
Start a no-obligation conversation with us to review your Riester contract and build a migration plan into the Altersvorsorgedepot.
> Disclaimer: Educational content based on the 2026 draft legislation. Final rules on migration, portability and tax treatment will be confirmed before launch. Not individual tax advice.