The idea of the 'Riester'-pension is simple: the saver pays a certain amount each month and commits himself to drawing on the capital only after retirement. The state provides a lot in return. The receipt of the paid-up capital is guaranteed. At the same time, investment funds offer high return opportunities.
State-sponsored 'riestern' can all employees and civil servants subject to pension insurance. Particularly low-income savers and families with children benefit from the 'Riester'- allowances. Higher earners in particular benefit from the tax advantages. The subsidy consists of a 'Riester' basic allowance of EUR 175 per year and a child allowance of EUR 185 per child and year. For each newborn child born from 2008 onwards, the subsidy amounts to EUR 300 per year. Contributions of up to EUR 2,100 can be claimed as a special expense in the income tax return. 'Riester'-assets that have already been saved can also be inherited.
Anyone who makes the required minimum contributions receives the full state subsidy. These are dependent on personal income and amount to four percent of the previous year's income, a minimum of EUR 60 per year and a maximum of EUR 2,100 (including allowances).
An overview of the certified 'Riester' fund products can be found here.
More support, less complexity: The BVI is in favour of a further development of the 'Riester' pension. Learn more in the video (available in German only):