German Retirement Planning 2026 Compared: Ruerup, Riester, Company Pension and ETF Plan After the Reform

Private retirement planning in Germany is being rebuilt in 2026: parliament has passed the Riester reform, the retirement securities account arrives in 2027, and the early-start pension is about to launch. At the same time the ECB raised rates in June while inflation sits at 3.2 percent. It is a good moment to sort the four building blocks calmly: Ruerup for the self-employed, the reformed Riester scheme, the company pension, and the unsubsidized ETF savings plan. This article shows what subsidies and tax breaks are really worth – and who each block suits.

Three layers – how German retirement planning is structured in 2026

Germany's pension system has been split into three layers since the 2005 reform. The first layer is basic provision: the statutory pension and the subsidized basic pension (Ruerup). The second layer covers subsidized supplementary provision, meaning Riester and the company pension (bAV). The third layer is unsubsidized private provision, traditionally a private annuity, today usually an ETF savings plan.

The difference between the layers is not just bureaucracy. It decides whether you save tax or receive allowances when you pay in, how easily you can reach your money, and how the payout is taxed later. For most people the right answer is not one or the other but a mix of several blocks.

One principle runs through every subsidized product: deferred taxation. During the saving phase the state waives tax or adds allowances, but it collects later when the pension is paid out. Whether that pays off depends mainly on your tax rate in retirement – which is usually lower than today.

Layer 1: Ruerup (basic pension) – the lever for the self-employed

The Ruerup or basic pension is designed for the self-employed and high earners who have no access to Riester or a company pension. Its big advantage is the tax deduction: in 2026 you can claim up to 30,826 euros as a single person, or double that, 61,652 euros, as a jointly assessed couple, as special expenses. Since 2023 these contributions are 100 percent deductible, so they directly reduce your taxable income.

The price for this lever is low flexibility. A Ruerup pension is only ever paid out as a lifelong monthly annuity, at the earliest from age 62. You cannot cancel it and have the capital paid out, it is generally not inheritable and cannot be pledged. If you want to stay flexible, this is the wrong place.

At payout, deferred taxation applies in full: anyone retiring in 2026 pays tax on 84 percent of the Ruerup pension, and that share rises for each later cohort to 100 percent by 2058. For a self-employed person with a high marginal tax rate the deduction during the paying-in phase can still add up clearly – especially in a high-income year.

Layer 2: Riester – allowances and the 2026 reform status

Riester lives on allowances. The basic allowance is unchanged in 2026 at 175 euros per year, and the child allowance is 300 euros per child (185 euros for children born before 2008). New entrants under 25 receive a one-off extra 200 euros. For the full subsidy you must pay in 4 percent of your prior-year pensionable income, up to 2,100 euros per year, with the allowances already counted in.

The drawback is well known: Riester requires a 100 percent contribution guarantee. The money can barely flow into higher-return equities, and acquisition and administration costs of often 2 to 3 percent per year eat further into the meager return. For families with several children and low earners the allowance ratio was still attractive, for high earners without children rarely so.

What matters in 2026 is the reform status: parliament passed the reform on 27 March 2026, the Bundesrat approved it on 8 May. Existing Riester contracts continue, but from 1 January 2027 no new ones can be signed. Anyone still thinking about entering should rather wait for the successor.

The retirement securities account from 2027 and the early-start pension

Riester is being replaced from 2027 by the retirement securities account – a state-subsidized securities account without a contribution guarantee. That missing guarantee is exactly the point: without the requirement to secure the capital, the money can flow fully into ETFs and funds and earn markedly more return over decades. The subsidy is set to be 50 percent on the first 360 euros of annual contribution and 25 percent on further contributions up to 1,800 euros, raising the maximum basic allowance to up to 540 euros.

In parallel comes the early-start pension. From a child's sixth birthday the state pays 10 euros per month into an individual securities account, regardless of income, until the 18th birthday. The 2020 birth cohort goes first in 2026. Over twelve years the state contributions add up to 1,440 euros – and thanks to the long horizon and compounding, that can grow into a noticeable sum by retirement age.

For your planning this means: anyone without a Riester contract can bridge the time to 2027 with a normal ETF savings plan and later check whether the subsidized account brings advantages.

Company pension: salary conversion and the 15 percent employer top-up

The company pension runs through your employer. With salary conversion you pay part of your gross salary directly into a direct insurance policy, a pension fund or a pension scheme – free of tax and social contributions. In 2026 contributions of up to 8 percent of the contribution assessment ceiling are tax-free (that is 8,112 euros), and up to 4 percent are also free of social contributions (4,056 euros). Gross income thus turns into more provision than it would cost net.

Since 2022 the employer top-up has been mandatory: if the company saves social contributions through your salary conversion, it must add at least 15 percent of the converted amount. Many employers, especially in collectively agreed sectors, voluntarily pay more. This top-up is effectively free money and often makes the company pension the best subsidized block if the employer is generous.

You should know two drawbacks. First, salary conversion lowers your gross pay and therefore slightly reduces your statutory pension and other wage-replacement benefits. Second, company pensions are fully subject to income tax during payout, and health and long-term care contributions apply – though only above an allowance. Weigh the employer top-up against these drawbacks and it quickly becomes clear whether your offer is worth it.

Layer 3: The unsubsidized ETF savings plan as a flexible block

The ETF savings plan gets no allowances and no tax deduction when you pay in – in return it is maximally flexible. You set the rate, pauses and withdrawals yourself, reach your money at any time, and with a broadly diversified world ETF pay only around 0.1 to 0.2 percent in running costs per year. That is the decisive figure: over 30 years the cost gap between 0.2 percent and the 2 to 3 percent of a Riester contract amounts to a five-figure sum.

Tax only applies on gains: capital gains and distributions are subject to the 25 percent flat withholding tax plus solidarity surcharge, though with equity funds 30 percent of the gains are tax-free via the partial exemption, and the 1,000 euro annual saver's allowance stays untaxed anyway. Unlike Ruerup or Riester, the account is fully inheritable and can be pledged.

On running costs it pays to look at the broker's savings-plan fee. Neobrokers often run ETF savings plans for free, for example Trade Republic (advertisement) – anyone investing small monthly rates thus avoids the 1.50 to 2.50 euros per execution that used to be common and adds up over the long run. But watch the total cost including the ETF's expense ratio, not just the savings-plan fee.

Allowances and tax savings versus deferred taxation

The core of every subsidy decision is a simple question: what is the subsidy worth today, and how much tax do you pay back later? Riester allowances and the tax deduction on Ruerup and the company pension lower your paying-in burden immediately. The price is the full or partial taxation of the pension. The deal pays off if your personal tax rate in retirement is lower than today – which is the case for most people, because income and tax rate fall in old age.

That is exactly why Ruerup is more attractive for a self-employed person on a 42 percent marginal rate than for a new entrant on a low income. And it is why Riester is strongest for families with several children, where the allowances make up a large part of the contribution. With the unsubsidized ETF account there is no subsidy up front, but also no full deferred taxation – only the flat tax on the gain.

Compounding over 30 years: why return and costs are everything

Over long periods compounding beats the allowances. An example for scale, deliberately simplified: paying in 200 euros per month for 30 years means 72,000 euros paid in. At a 2 percent annual return – realistic for a guaranteed, expensive product – that grows to roughly 98,000 euros. At 6 percent, as a broad equity ETF has reached in the long-run historical average, it is roughly 200,000 euros. This is not a forecast but an arithmetic illustration: the four percentage points of return difference double the result.

This is where the macro backdrop comes in. The ECB raised the deposit rate to 2.25 percent on 11 June 2026, because euro-area inflation at 3.2 percent is still clearly above the two percent target. Higher rates make guaranteed products nominally a little more attractive, but a fixed 2 percent pension loses real value at 3.2 percent inflation. For retirement planning what counts is the return after costs and after inflation, not the nominal figure in the brochure.

The consequence: the longer your investment horizon, the more it argues for a high equity share and low costs. Guarantees cost return and mainly protect against short-term swings – a risk that barely matters over 30 years.

Which block suits whom

A rough orientation, not a substitute for advice: employees first check the company pension, because the 15 percent top-up and the savings on tax and social contributions are hard to beat – especially with a generous employer. Beyond that, an unsubsidized ETF savings plan is the flexible default block for anyone who starts early and has a long horizon.

Self-employed people without access to a company pension or Riester use Ruerup as a tax lever, above all in high-income years, combined with a free ETF account for flexibility. Families with several children benefit most from the Riester allowances – though a new contract is only possible until the end of 2026, and it often pays to look at the coming retirement securities account.

For everyone the rule holds: build the emergency reserve and pay off expensive debt first, then the provision. And provision is not a race for the one perfect product but a question of starting early and choosing low costs.

How tools on CalcSI help

Before you commit to a block, run the orders of magnitude yourself. With the compound interest calculator you can play through what your monthly rate becomes at 2, 4 or 6 percent over 30 years – the single biggest lever. The personal inflation calculator shows how much purchasing power a fixed pension loses at 3.2 percent inflation over the years. With the percentage calculator you check allowance ratios, the 15 percent employer top-up or your tax benefit. And the comparison building-savings contract versus savings plan helps you weigh a guaranteed product against a return-oriented one cleanly.