# Private pensions in Germany: a guide for people who did not grow up with the system

> Germany splits retirement saving into three tax layers, and the layer you choose decides what you can deduct today, what is taxed later and whether you can take the money with you. For expats the key question is not which insurer, but how long you plan to stay and where you will retire.

Quelle/Source: https://www.nammert.com/en/insurance-broker-private-pension.php  
Updated: 2026-09-18

## Should I take out a German private pension if I might leave Germany?

Only if the product still works for you abroad. A Rürup contract cannot be cashed in, but it keeps paying a lifelong pension wherever you live, taxed according to the tax treaty. Riester subsidies generally have to be paid back if you move outside the EU or EEA. An unsubsidised private pension policy is the most portable: you can keep it, make it paid-up or cash it in. If your stay is short, the high early costs of any policy weigh heavily.

## At a glance

- **Mandatory?:** No, voluntary on top of the state pension
- **Rürup ceiling 2026:** €30,826 per person, fully tax-deductible
- **Tax on unsubsidised pension:** only the 'income portion', 17% if payments start at 67
- **Riester:** new contracts until 31 Dec 2026, replaced by a new scheme from 2027
- **Cooling-off period:** 30 days after receiving the documents

## The three layers: what is different from a UK pension or a US 401(k)

Layer one is the statutory pension plus the Rürup pension (Basisrente). Rürup contributions are fully deductible up to €30,826 in 2026, but the money is locked until retirement, cannot be withdrawn as a lump sum and is paid out only as a lifelong annuity. There is no equivalent of a 25% tax-free lump sum.

Layer two covers company pensions and Riester, both subsidised and taxed in full on payout. Layer three is the unsubsidised private pension policy: paid from taxed income, but the later annuity is taxed only on a small 'income portion'. If you take a lump sum instead, half of the gain is taxable, provided the contract ran at least 12 years and you are at least 62.

Unlike in the UK or US, most German private pensions are sold as insurance contracts, not as investment accounts. That brings a lifelong payout guarantee, but also acquisition costs that are spread over the first five years. We advise on insurance contracts, not on individual funds or securities.

## Riester ends, a new subsidised scheme starts in 2027

The Bundestag passed the retirement savings reform on 27 March 2026 and the Bundesrat approved it on 8 May 2026. From 1 January 2027 no new Riester contracts can be signed. Existing contracts continue with their current subsidies and may switch to the new system.

The new scheme pays 50 cents per euro saved up to €360, then 25 cents per euro up to €1,800, so up to €540 a year, plus up to €300 per child. Savers choose between a retirement investment account without guarantee, products with an 80% or 100% contribution guarantee, and a standard product with costs capped at 1.0% a year. For the first time, self-employed people will also be eligible.

The planned 'Frühstart-Rente', €10 a month from the state for every child aged 6 to 18, was approved by the cabinet on 12 August 2026 but is still going through parliament as of September 2026. It is not law yet.

## Leaving Germany: what happens to your contract

An unsubsidised policy stays valid when you move. Most insurers pay the annuity to a foreign bank account, and taxation follows the double tax treaty between Germany and your new country. Rürup pensions also continue, but you can never cash them in, so check the tax rules of the country where you plan to retire.

Riester is the trap: if you move outside the EU or EEA and are no longer eligible, the subsidies and tax benefits normally have to be repaid. US citizens should also get US tax advice before buying a fund-linked policy, because the IRS may treat German funds inside the contract differently from German tax law.

## What is covered

- Lifelong monthly annuity from the agreed start date
- Option to take a lump sum instead of an annuity, for unsubsidised policies
- Guaranteed annuity factor or minimum pension, depending on the plan
- Guaranteed payment period that continues to your heirs
- Return of contributions or fund value if you die before retirement, if agreed
- Automatic yearly contribution increases without new health questions
- Top-ups and partial withdrawals on flexible plans
- Contribution waiver if you become unable to work, if included

## What is not covered

- No guaranteed return on the fund part
- No lump sum from a Rürup contract, ever
- No early access to Rürup money, not even in hardship
- No automatic inflation adjustment unless a rising annuity is agreed
- Profit participation is not guaranteed and can be cut
- No long-term care benefit without a separate add-on

## Who needs it

- Expats planning to stay in Germany long term, ideally until retirement
- Self-employed people and freelancers outside the statutory pension, for whom Rürup is the most tax-efficient option
- High earners who want to cut their German tax bill now
- Anyone worried about outliving their savings

## Who can do without

- People planning to leave Germany within a few years, because early costs eat most of the value
- Anyone without an emergency fund of three months' expenses
- Anyone still paying off expensive consumer debt

## What it costs

You choose the contribution yourself, so there is no fixed premium to compare. What matters are costs, guarantees and the annuity factor. The 'effective costs' figure in the product information sheet shows how many percentage points the costs take off your return each year.

**What drives the premium:**

- Acquisition costs, spread over the first five years
- Ongoing administration and fund charges
- Level of guarantee on contributions or annuity
- Time until the pension starts
- Annuity factor and guaranteed payment period
- Add-ons such as a contribution waiver on disability

_We give no contribution benchmarks because you set the contribution. Costs, annuity factor and guarantees are binding only in the quote. Tax figures as of 2026._

## The policy levels on the market

- **Traditional policy:** Guaranteed minimum interest of up to 1.0% on the savings part plus bonuses. Predictable, but with low expected returns.
- **Unit-linked with partial guarantee:** Part of the money secures a minimum benefit, the rest goes into funds. A compromise between security and return.
- **Unit-linked without guarantee:** Everything is invested in funds and moves with the market. Best suited to long terms, ideally with a guaranteed annuity factor.

## How to recognise a good policy

| Criterion | Minimum standard | Strong policy | Why it matters |
| --- | --- | --- | --- |
| Effective costs | shown in the product information sheet | below 1% a year over the whole term | One percentage point of costs adds up to five figures over 30 years. |
| Annuity factor | stated, but insurer may lower it | fully guaranteed | Only a guaranteed factor tells you what your savings will buy. |
| Payment abroad | on request | annuity paid to foreign accounts without extra fees | Expats often retire outside Germany. |
| Flexibility | paid-up option | top-ups, withdrawals, flexible start date | Careers and countries change over 30 years. |
| Contribution holiday | none | up to 24 months at no cost | A career break or move should not destroy the contract. |
| Guaranteed payment period | 5 years | selectable up to age 85 or with refund of the remaining capital | Otherwise the capital is lost if you die soon after retirement. |
| Documents in English | German only | English summaries and service | You should understand what you sign. |

## Insurers on the German market

Almost every German life insurer sells private pensions. The differences lie in costs, annuity factors and fund choice rather than in the brand. This list is a market overview and says nothing about which insurers we work with.

- **Allianz**: life insurer of the Allianz group, sold through agents and brokers
- **Alte Leipziger**: mutual insurer with a strong broker channel
- **Stuttgarter**: mutual insurer, mainly through brokers
- **LV 1871**: Munich-based mutual, broker distribution
- **Volkswohl Bund**: mutual insurer, broker distribution
- **HDI**: part of the Talanx group, brokers and agents
- **Swiss Life**: part of the Swiss Life group, sold via financial advisers and brokers
- **Debeka**: mutual with its own sales force, does not work with brokers
- **Hannoversche**: direct insurer of the VHV group, mainly online

77 insurers supervised by BaFin, the German regulator, are licensed for this class of insurance. (Lebensversicherer). Source: BaFin company database, retrieved 2026-09-18. Insurers from other EU countries selling through a branch or without a German office are not included.

## Typical claims and who pays

- **Retiring to Spain, annuity paid there** (monthly annuity to a foreign account, fees possible): Most insurers pay abroad on request, some with charges. Strong policies pay to foreign accounts without extra fees.
- **Riester saver moves to Canada** (subsidies and tax relief usually clawed back): Leaving the EU or EEA usually ends Riester eligibility, whatever the provider. That is why expats should think twice before signing one.
- **Insurer lowers the annuity factor** (less pension per €10,000 of capital, for life): If the factor is only stated, the insurer may cut it when life expectancy rises. If it is fully guaranteed, it stays.
- **Parental leave, no contributions** (a gap in savings, plus losses if you cancel early): Basic policies only offer a paid-up option with lower guarantees. Strong ones allow a break of up to 24 months at no cost.
- **Market crash just before retirement** (the fund value can drop sharply within months): No fund-linked policy guarantees prices. Strong ones shift gradually into safer assets in the final years.
- **Dies two years into retirement** (the unused capital, often five or six figures): With a five-year guaranteed period, heirs receive only the remaining three years. Strong policies refund the remaining capital.

## Myth or truth

- „German private pensions are protected if the insurer goes bust." ✔ Largely true. German life insurers must belong to a statutory protection fund run by Protektor Lebensversicherungs-AG, which takes over the contracts. Guaranteed benefits can be cut by up to 5 percent.
- „You lose your German state pension if you leave Germany." ✘ False. Entitlements you have earned stay yours and can be paid abroad once you qualify, usually after five years including other EU periods. Some non-EU citizens with less can apply to have their own contributions refunded after 24 months abroad.
- „The monthly pension shown in a German quote is guaranteed." ✘ False. Only the amount explicitly labelled as guaranteed is promised, and it is usually much smaller. The headline figure is an example based on an assumed return.
- „Delaying the start of your annuity raises it noticeably." ✔ True. The capital grows for longer and has to last for fewer years, both of which lift the monthly amount. Strong policies let you choose the start within a window.
- „A German private pension annuity is taxed at your full income tax rate." ✘ False for unsubsidised policies. Only a portion of each payment counts as taxable income, and that portion shrinks the later you start. Rürup and Riester pensions are the ones taxed almost in full.

## Common mistakes

- Buying a Rürup contract without knowing where you will retire
- Signing a Riester contract and then moving outside the EU
- Cancelling in year two or three instead of making the policy paid-up
- Taking the projected pension in the offer for a guarantee
- Ignoring US tax rules as a US citizen
- Comparing monthly contributions instead of costs and annuity factors

## FAQ

### Can I take my German private pension with me when I leave?

Yes, an unsubsidised policy and a Rürup pension stay valid and can be paid abroad. Taxation then follows the double tax treaty. Riester is different: subsidies usually have to be repaid if you move outside the EU or EEA.

### Is a Rürup pension like a UK SIPP?

Only partly. Both give tax relief on contributions, but a Rürup pension can never be cashed in or taken as a lump sum. It pays only a lifelong annuity, and only a spouse or children with child benefit can receive a survivor's pension.

### Can I still sign a Riester contract in 2026?

Yes, until 31 December 2026. You need to be in the statutory pension scheme or a civil servant, or married to someone who is. From 2027 the new subsidised scheme replaces Riester for new savers.

### How is a private pension taxed in Germany?

For an unsubsidised policy only the income portion is taxed, 17% of the annuity if it starts at 67. Rürup and Riester pensions are taxed on payout almost in full, because contributions were tax-relieved.

### Can I get my contributions back if I cancel?

You get the surrender value, which is much lower than your contributions in the early years because acquisition costs are charged over the first five years. Making the policy paid-up is usually better. Rürup contracts cannot be cancelled at all.

### Do I have to pay health insurance contributions on a private pension?

If you are a compulsory member of statutory health insurance as a pensioner, private pensions are contribution-free. Voluntary members of statutory health insurance pay contributions on all income, including private pensions.

### Can my children benefit from the new state pension saving for kids?

The Frühstart-Rente is planned: €10 a month from the state for children aged 6 to 18. The cabinet approved the draft on 12 August 2026, but parliament had not voted as of September 2026, so no accounts can be opened yet.

### Can I have my German pension documents in English?

The legally binding documents are almost always in German. Some insurers provide English summaries or service in English. We explain the contract terms in English before you sign.

### How long can I cancel a new contract?

You can withdraw within 30 days of receiving the complete contract documents, without giving a reason. After that, only cancellation or a paid-up policy is possible.

## Legal basis and sources

- [Income Tax Act (EStG, German)](https://www.gesetze-im-internet.de/estg/)
- [Insurance Contract Act (VVG, German)](https://www.gesetze-im-internet.de/vvg_2008/)
- [BaFin company database (licensed insurers)](https://portal.mvp.bafin.de/database/InstInfo/)

## Request quotes

We obtain quotes and come back with a comparison. Free of charge and without obligation: the insurer pays our commission. You can write in English. https://www.nammert.com/en/insurance-broker-private-pension.php#anfrage

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NAMMERT Assekuradeur GmbH, insurance broker licensed under section 34d(1) of the German Trade Regulation Act, broker register no. D-C08Q-TOSD4-37. For boat and yacht insurance we act as underwriting agency, not as broker.

NAMMERT Assekuradeur GmbH, Karl-Marx-Straße 4, 15711 Königs Wusterhausen, +49 3375 29 12 77, info@nammert.com. Wikidata: Q141141479.