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What happens if I cancel my Riester contract?

In short

Cancelling with a payout counts as harmful use (schädliche Verwendung). You repay all allowances and the tax benefits the tax office recorded, and the earnings are taxed. Acquisition costs already spent are gone too. It is usually cheaper to stop payments and leave the contract dormant, or to keep it alive with the minimum of EUR 60 a year.

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What happens if I cancel my Riester contract?

What it costs

Figures from official information and published analyses, as of September 2026.

Example	Typical range
Basic allowance per saver	EUR 175 a year
Child allowance	EUR 300 a year for children born from 2008, EUR 185 before
Minimum floor without which no allowance is paid	EUR 60 a year
Average repayment on cancellation, first half of 2025	about EUR 2,500, of which about EUR 1,750 allowances and EUR 750 tax benefits
Cost of switching provider	at most EUR 150 at the old provider
Small pension threshold 2025	up to EUR 37.45 monthly pension, a lump sum is then not harmful

Allowances and limits are set by law. How much you would repay depends on your contribution years, your children and your tax rate; the average is only a guide. The exact amounts are in your provider's statement and your tax assessments. This is not tax advice.

Worked example

Contract since 2011, one child, cancelled after 15 years

This is the maths when balance and repayment are set side by side.

Own contributions over 15 years	EUR 11,400
Basic allowance EUR 175 × 15 years	EUR 2,625
Child allowance EUR 300 × 15 years	EUR 4,500
Separately recorded tax reduction	EUR 900
Balance in the contract	EUR 19,000
Repayment on cancellation	EUR 8,025

About EUR 11,000 remain, less than the EUR 11,400 you paid in yourself, and tax on the earnings is not yet deducted. Stopping payments costs nothing by comparison.

What harmful use means

Riester is subsidised because the money is meant to be paid out as a pension in old age. If you take it out earlier, the condition for the subsidy is gone. German law calls this harmful use.

It is not a penalty but a reversal: what the state gave goes back. Your own contributions stay tax free, everything above that is settled.

Simply stopping payments triggers nothing. Only the payout makes the contract harmful.

What goes back and what stays

The central allowance office (Zentrale Zulagenstelle) reclaims every allowance ever credited, and the tax office reclaims the separately recorded tax reduction from your deductions.

On top of that, earnings and gains are taxed. What remains is the surrender value minus these amounts.

Item	What happens
Basic allowance EUR 175 a year	repaid in full
Child allowance EUR 300 a year	repaid in full
Separately recorded tax reduction	reclaimed by the tax office
Earnings and gains	taxed
Your own contributions	stay tax free
Acquisition and sales costs	already used up in the first five years

Cheaper ways out

There are several ways to stop paying without losing the subsidy. They beat a cancellation almost every time.

The minimum contribution is the underrated option: EUR 60 a year, just EUR 5 a month, keeps the contract subsidised. If you have children in the contract, that often brings back several times as much in allowances.

Option	Consequence
Stop payments (beitragsfrei stellen)	no repayment, the balance stays in the contract
Pause and pay again later	no repayment, allowances only in years with contributions
Minimum contribution EUR 60 a year	allowances continue, reduced if the contribution is too low
Switch provider	capital moves directly, at most EUR 150 costs
Use for your own home (Wohnriester)	capital into a home you live in, from EUR 3,000

If you are leaving Germany

Many expats want to cancel before they move. That is often the most expensive option. If you move within the EU or EEA, you can usually leave the contract dormant and take the pension later without repaying.

If you move outside the EU and EEA, repayment may be due anyway, in particular once the pension starts. Ask the provider and the central allowance office in writing what applies in your case before you decide.

Step by step

Find your latest annual statement and read the current balance.
Ask the provider in writing for the surrender value and the total of all allowances received.
Look up the separately recorded tax reduction in your tax assessments.
Subtract both from the balance and compare with your own contributions.
Check whether stopping payments, the EUR 60 minimum or a switch of provider is enough.
If you are moving abroad, get written confirmation of what happens in your new country.

Checklist

Surrender value and allowances received confirmed in writing
Separately recorded tax reduction taken from your tax assessments
Offer for stopping payments obtained
EUR 60 minimum contribution checked as a bridge
Switching provider compared, at most EUR 150 costs
Notice period of three months to the end of a quarter noted

Common mistakes

Cancelling for short-term cash and repaying many years of subsidy
Looking only at the surrender value and forgetting the repayment of allowances and tax benefits
Cancelling out of habit before moving abroad instead of leaving the contract dormant
When switching, cancelling and taking the money instead of transferring it directly

Questions and answers

Frequently asked

Do I get my contributions back when I cancel?

Rarely in full. You receive the surrender value, and allowances and tax benefits are deducted from it. Your own contributions themselves stay tax free.

Is stopping payments really free?

You repay nothing and keep the balance. The later pension is smaller because nothing is added, and ongoing administration costs may continue.

Do I have to cancel when I leave Germany?

No. You can usually leave the contract dormant. Within the EU and EEA the allowances are generally safe; outside, check first whether repayment is due.

Can I switch provider without losing the subsidy?

Yes. The capital moves directly into the new contract and the allowances stay. The old provider may charge at most EUR 150.

How long is the notice period?

Three months to the end of a calendar quarter. The same period applies if you transfer the capital to another provider.

Is cancelling worth it if I need money?

Only if there is no other source. Work out what remains after repayment and tax, and compare it with the cost of a loan.

Sources

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