Germany axes Riester pension in favor of simpler state-backed savings plan

A decade of consumer protests finally pays off. The new system promises transparency, lower fees, and predictable returns—unlike its troubled predecessor.

, and Administrator

2026 April 20 . 2:19 AM

1 min read

The image shows an old German stock certificate issued by the German government, with text and... — The image shows an old German stock certificate issued by the German government, with text and numbers written on it.

Germany axes Riester pension in favor of simpler state-backed savings plan

The agreement is a "milestone" for consumers and "a good day for everyone who needs to make private pension provisions," Ramona Pop, executive director of the Federation of German Consumer Organizations (VZBV), declared on Tuesday. "At last, there will be a standard product for all—one that is affordable and designed to deliver strong returns. Now, the focus must be on ensuring the new standard product and access to it are as consumer-friendly as possible."

In its coalition agreement, the federal government had pledged to replace the Riester pension scheme with a new retirement product, including a simplified standard option. Under the government's initial draft bill, providers were still expected to offer their own standard products and distribute them on a commission basis.

However, a central standard product was missing from the draft approved in mid-December. On Tuesday, the coalition partners—the Christian Democratic Union (CDU/CSU) and the Social Democratic Party (SPD)—revised this, agreeing to introduce a low-cost central standard product alongside private offerings. This product will serve as a benchmark for private alternatives and provide consumers with a straightforward way to save for retirement. For over a decade, the Federation of German Consumer Organizations has advocated replacing the Riester pension with a state-backed standard product modeled after Sweden's system.