Life annuity in the Altersvorsorgedepot: a guaranteed pension for life
The life annuity is one of the two central payout options in the Altersvorsorgedepot. The provider pays you a guaranteed monthly pension until death. You carry no longevity risk, but you also do not know whether you will use up the capital you paid in.
Table of contents
What is a life annuity?
A life annuity is an insurance product in payout mode: you hand your account balance to the provider and in return receive an agreed monthly pension for life, whether you reach 70 or 100.
How does the life annuity work?
- At the start of retirement (from 65 at the earliest) you convert your account balance into a life annuity.
- Optional: you take up to 30% as a lump sum.
- The provider converts the remaining capital using the Annuity factor into a monthly payment.
- This pension is paid for life.
What does the life annuity offer?
The life annuity offers predictable security, but little flexibility and no inheritance.
Annuity factor: what does it mean?
The annuity factor states how many euros of monthly pension you get per €10,000 of capital. Examples:
| Annuity factor | Capital | Monthly pension |
|---|---|---|
| €25 | €100,000 | €250 |
| €30 | €100,000 | €300 |
| €35 | €100,000 | €350 |
Providers may partly adjust the annuity factor during the decumulation phase, but must communicate this transparently. Watch out for guaranteed vs. projected annuity factors.
When is a life annuity worth it?
If you reach a high age . At 95, for example, a monthly pension of €250 starting at 67 would already have paid out around €84,000. Anyone who dies earlier receives less than they paid in, unless there is a guaranteed annuity period that cushions the risk for survivors.
Life annuity vs. drawdown plan to age 85
| Criterion | life annuity | drawdown plan to age 85 |
|---|---|---|
| Duration | for life | at least until 85 |
| Amount | fixed, guaranteed | variable, possibly higher |
| Inheritance of remaining capital | only with a guarantee period | yes, always |
| Longevity protection | full | limited |
Real-life examples of the life annuity
Heinz, 67, account value €120,000, annuity factor €28. Life annuity: €336 per month, guaranteed for life. If he dies after 5 years with a 10-year guarantee period, his widow receives the pension for another 5 years.
Andrea, 67, account value €200,000, wants to leave remaining capital to her heirs. Instead of a life annuity she chooses the drawdown plan to age 85: about €925/month, with any remaining capital going to her children on death.
Frequently asked questions about the life annuity
What is a guaranteed annuity period?
A period (usually 10 or 20 years) during which the pension continues to be paid to survivors if you die early. The pension is somewhat lower as a result.
Can I cancel the life annuity?
No. Once the pension is being paid, it is irrevocable. If you want flexibility, you should choose the drawdown plan instead.
Does the pension increase every year?
Only if a dynamic component has been agreed. The classic form is a fixed pension; some providers offer profit participation.
Can the annuity factor still fall during the decumulation phase?
Yes, if it is only “projected” and not “guaranteed”. Guaranteed annuity factors stay fixed.
Will my spouse continue to receive a pension after my death?
Only with an agreed guaranteed annuity period or a survivor’s pension option.
How does inflation affect the life annuity?
Classic life annuities are nominal, so purchasing power falls. Some providers offer dynamic life annuities with adjustments.
Who is it suitable for?
If you prefer a guaranteed lifelong pension, the life annuity is a good choice.
Last updated: June 2026.
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Related content: Altersvorsorgedepot from 50.
All terms at a glance: Glossary from A to Z.
Official sources and further information
- Federal Ministry of Finance, FAQ on the reform of private retirement provision
- German federal government, private retirement provision reform
- German Bundestag, resolution on the Altersvorsorgedepot (calendar week 13/2026)
- Bundestag printed paper 21/4088 (PDF)
- Deutsche Rentenversicherung, reform announcement
- Stiftung Warentest, Altersvorsorgedepot
- Verbraucherzentrale, the new Altersvorsorgedepot: opportunity or sales trap?