Permanent allowance application: submit once, allowance every year

What is the permanent allowance application?

At its core a power of attorney, nothing more. You allow your provider to apply for the allowance in your name, not just once but for all future years. The provider then reports your contributions to the ZfA each year. The ZfA checks them and transfers the money.

The Riester pension had this power of attorney too, it just was not standard everywhere. Anyone without it had to fill in a form every year. Many forgot. After two years the allowance was gone.

How the process works

1. You open the securities account and grant the permanent allowance application in the process, usually a tick box on the application form.
2. You pay in at least the minimum own contribution during the calendar year.
3. After the end of the year your provider reports the contributions to the ZfA.
4. The ZfA cross-checks your data with your pension account and the family benefit office.
5. The allowance flows into the securities account and is invested like a contribution of your own.

Time passes between the contribution year and the credit. Under the procedure so far, the allowance arrives during the following year, sometimes later. So do not expect to see the subsidy for 2027 in the securities account back in December 2027.

The gap when switching provider

The permanent allowance application applies to the contract for which you submitted it. It does not automatically move with you when you transfer the balance to another provider.

If you overlook this, you lose the allowance for the year of the switch. The amount is not large. But it is missing permanently, because it also loses all the growth time up to the start of retirement. So put the new application on the same to-do list as the transfer request, ideally with a reminder for the moment the balance arrives at the new provider.

What you still have to report yourself

The power of attorney covers the application, not your personal circumstances. The ZfA does cross-check with your pension account and the family benefit office and so learns a good deal by itself, but by no means everything that matters for your allowance. So actively report the following to your provider:

• The birth of a child or the end of entitlement to child benefit
• Marriage, separation, divorce
• A move between employment and self-employment
• A change of name or a new tax identification number

The most common cause of a missing allowance is an incorrect or missing tax identification number. Without it the ZfA cannot match you to your record. One wrong digit is enough.

Three examples