How does the Altersvorsorgedepot work?
You have heard of the Altersvorsorgedepot (Germany’s state-subsidized retirement investment account) but do not yet know exactly how your money actually works inside it, and how much ends up with the state and how much with you? Let us go through it together step by step.
For most people the state pension alone is not enough in old age, and the previous subsidy models often did not close that gap. Now the legislator has followed up: from 1 January 2027, the Altersvorsorgedepot launches a new form of state-subsidized retirement provision in Germany. The money is invested in ETFs or funds instead of insurance guarantees, the subsidy is up to three times higher than with Riester, and for the first time the model is also open to the self-employed.
The key points at a glance
The Altersvorsorgedepot runs in two phases: the accumulation phase (paying in and investing on the capital market) and the decumulation phase from the age of 65 at the earliest.
The government subsidy is proportional to contributions, with up to €540 basic allowance per year. The allowances flow directly into the securities account and are invested there as well.
All income during the accumulation phase remains completely tax-free (EET principle): no flat-rate withholding tax on investment income, no Vorabpauschale (advance lump-sum taxation), and tax-free switching.
The law provides for three product variants: the free Altersvorsorgedepot, the standard securities account and the guarantee product.
The securities account is earmarked for retirement provision: withdrawals before the 65th birthday count as a non-qualifying withdrawal and require allowances and tax advantages to be repaid.
In short: The Altersvorsorgedepot is a state-subsidized securities account that will be introduced on 1 January 2027 as the successor to Riester. It works on the EET principle (Exempt-Exempt-Taxed): contributions and all income during the accumulation phase are tax-exempt, and tax is only due on the payout in retirement. For full tax exemption the 12/65 rule applies: the contract has to run for at least 12 years and the payout may not begin before the completed age of 65. According to the Federal Ministry of Finance (2026), the law was passed by the Bundestag on 27 March 2026 and confirmed by the Bundesrat on 8 May 2026.
The basic principle of the Altersvorsorgedepot: two phases, one goal
The Altersvorsorgedepot is not an ordinary securities account. It is a state-certified retirement provision contract with two clearly separated sections: the accumulation phase during working life and the decumulation phase in retirement. The capital saved is earmarked and may generally not be withdrawn during the accumulation phase.
Unlike with a savings account, the money is not held as a deposit but invested directly on the capital market in securities such as ETFs and funds. The goal is to build wealth over decades with a real chance of a return rather than a nominal rate of interest.
Phase 1: the accumulation phase
During the accumulation phase your money passes through three stations. Let us look at them one by one.
How paying in works
You pay into your Altersvorsorgedepot via a monthly savings plan or as a one-off amount. Anyone paying in at least €120 a year receives government allowances. You achieve the greatest subsidy effect with an annual own contribution of €1,800. Up to this limit the government subsidizes in proportion to your contributions.
You can pay in up to €6,840 per securities account per year. These excess payments are not subsidized with allowances, but they still benefit from the tax deferral during the accumulation phase.
How the government allowances get into the securities account
The government subsidy is proportional to contributions. For the first €360 of own contribution in a year there is 50 cents of allowance for every euro paid in, so up to €180. For every further euro up to an annual contribution of €1,800 the allowance is 25 cents, so up to €360. Together that gives a maximum basic allowance of €540 a year. If you have children who are eligible for child benefit, a child allowance of up to €300 is added per child.
One important point: the allowances do not land in your bank account. They flow directly into the securities account and are invested there, together with your own contributions, in the securities you have chosen. That makes them more than just a premium: they work as an additional lever for your return.
How the money works on the capital market
As soon as contributions and allowances are in the securities account, they are invested in securities. Funds and ETFs up to risk class 5 of 7 are permitted, as well as bonds and similar instruments. Individual shares, cryptocurrencies and complex derivatives are excluded.
During the accumulation phase you pay no tax. Price gains, dividends and switches within the securities account remain completely tax-free. There is no flat-rate withholding tax on investment income and no Vorabpauschale, so compounding works at full strength over decades. What this means for your specific tax calculation is explained in the article on the taxation of the Altersvorsorgedepot.
In short: During the accumulation phase you pay in, the government adds up to €540 in allowances, and the entire capital is invested tax-free on the capital market. No flat-rate withholding tax on investment income, no Vorabpauschale, and compound interest working over decades without deductions.
How much subsidy you are actually entitled to can be worked out in a few minutes with our subsidy calculator.
Phase 2: the decumulation phase from 65
The decumulation phase begins at the earliest at the completed age of 65 and at the latest at the completed age of 70. At the start you can make a one-off withdrawal of up to 30% of the capital you have saved. You then receive the remaining amount either through a drawdown plan running at least to the age of 85, or as a lifelong life annuity.
Payouts are taxed on a deferred basis at your personal income tax rate, that is only once the money is paid out. In retirement this rate is usually lower than during working life. Social security contributions such as health and long-term care insurance contributions do not apply to payouts from the Altersvorsorgedepot for people with compulsory KVdR insurance (that is, members of the statutory health insurance who meet the qualifying period for health insurance for pensioners); this is what distinguishes the securities account from occupational pension schemes.
Three product variants: which ones are there?
Not every Altersvorsorgedepot works in the same way. The law provides for three product categories, which differ above all in terms of guarantee and freedom of investment:
Free Altersvorsorgedepot: This product does without a contribution guarantee and offers full freedom of investment. Your capital can be invested 100% in equity ETFs or equity funds (ETFs are preferable because of their lower cost ratio). This makes the highest return potential possible, but also means stronger fluctuations over the term.
Standard securities account: A standardized variant with two predefined funds – one return-oriented and one security-oriented component. No investment decisions of your own are required here. An automatic lifecycle model gradually shifts into the safer fund as you get older. A statutory cost cap of one percent reduction in yield (RIY) per year applies to the standard securities account.
Guarantee product: If your focus is on capital preservation, choose a product with an 80 or 100 percent contribution guarantee. The guarantee does, however, limit the possible equity allocation and with it the return potential.
In short: The free securities account maximizes return potential, the standard securities account takes the investment decision off your hands, and the guarantee product secures the capital paid in. All three variants follow the same statutory rules for contributions, subsidy and payout.
Altersvorsorgedepot vs. an ordinary ETF savings plan: the difference at a glance
If you already invest in a non-subsidized ETF savings plan, you will rightly ask what the Altersvorsorgedepot does differently in mechanical terms. The three most important differences:
Government allowance: In the Altersvorsorgedepot no flat-rate withholding tax on investment income and no Vorabpauschale apply during the accumulation phase, so your capital grows undiminished over decades. In an ordinary ETF account the Vorabpauschale falls due each year, and gains on sale are immediately subject to flat-rate withholding tax on investment income.
Tie-in: The Altersvorsorgedepot is tied to the start of retirement. Withdrawals before the 65th birthday are generally possible, but they count as a non-qualifying withdrawal and require allowances and tax advantages to be repaid. An ordinary ETF savings plan can be closed at any time without consequences.
In short: The mechanical advantage over a non-subsidized ETF savings plan lies in two points, the government allowance and the tax deferral during the accumulation phase. If you accept the long-term tie-in, in return you receive a government subsidy and tax-free capital growth over decades.
Whether that is worthwhile for your own situation is explained in the article on the advantages and disadvantages of the Altersvorsorgedepot.
Conclusion
The Altersvorsorgedepot follows a clear principle: you pay in, receive government allowances, invest the capital tax-free on the market and have it paid out in retirement. How much ends up in your account in the end depends above all on three factors: your contribution, the product you choose and the provider’s costs.
The first providers launch on 1 January 2027. We will let you know as soon as the products are live so that you can compare right away.
How do the government allowances get into the Altersvorsorgedepot?
Once applied for, the allowances are paid directly into the securities account, not into your bank account. There they are automatically invested in the ETFs or funds you have chosen and grow together with your own contributions. The allowance application has to be submitted every year; how the procedure will work in practice for the Altersvorsorgedepot is something providers will implement when the market starts in January 2027.
What does the EET principle mean for the Altersvorsorgedepot?
EET stands for Exempt-Exempt-Taxed. Contributions and all income during the accumulation phase are tax-exempt (Exempt twice), and tax is only paid on the payout in old age (Taxed). That means price gains, dividends and switches within the securities account remain completely tax-free throughout the accumulation phase. Only when money is paid out in retirement does your personal income tax rate apply, and in old age it is usually lower than during working life.
How exactly does the tax deferral work with the Altersvorsorgedepot?
In the Altersvorsorgedepot neither flat-rate withholding tax on investment income nor the Vorabpauschale applies during the accumulation phase. Switches within the securities account are also possible tax-free. The entire capital, including all income, therefore continues to grow without tax deductions over the whole term. The tax is levied on a deferred basis, only on payout in retirement and on the basis of the tax rate applicable then.
From when can I withdraw the money from the Altersvorsorgedepot?
The regular decumulation phase begins at the earliest at the completed age of 65. It has to be started by the completed age of 70 at the latest. Anyone who already draws a statutory old-age pension before their 65th birthday because of long contribution years can start the payout from the securities account at the same time.
What happens with the Altersvorsorgedepot if I access the money before my 65th birthday?
An early withdrawal generally counts as a non-qualifying withdrawal. In that case all government allowances received and the tax advantages claimed have to be repaid. In addition, accrued income is taxed retrospectively. There are exceptions, for example for owner-occupied residential property under certain conditions.
Lawyer & financial market expert · AVD Anbieter Vergleich
Rolf Henning Hackel is a qualified lawyer who has spent more than 22 years as a board member and managing director at various software providers to the financial industry, and as a founder himself. As a thorough market expert he knows not only the different providers but also the financial industry’s products, their strengths and weaknesses, and the regulatory framework around them. At AVD Anbieter Vergleich he writes about the new Altersvorsorgedepot and explains subsidies, providers and return potential in plain language — independently and free of advertising.
