We did the math: What would have happened if the retirement savings account had already existed in 2002 as an alternative to the Riester pension – with MSCI World ETF instead of guaranteed funds, with 50 cent bonuses instead of a fixed 175 euros, with tax-free compound interest instead of 1.7 percent effective costs? The numbers are painful. 43,000 euros less in the portfolio – and most savers don’t know it. But they also show how big the opportunity is from 2027.
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That’s what we expected
In our comparison, we look at the return on investment of the individual products. We compare four Riester generations: savers who started paying in 100 euros a month in 2002, 2005, 2010 or 2015. We calculate two scenarios for each generation:
Riester reality: For the sake of simplicity, we calculate our own contribution with the fixed basic allowance of 175 euros over the entire term. The amount was increased from 154 euros to 175 euros in 2018. Return after costs: 2.5 percent per year (optimistic assumption – according to Finanzwende e. V, 65 percent of all Riester products do not even achieve a gross return of 2 percent, so after costs of typically 1.5-2.5 percent there is hardly anything left). With regard to the guarantee costs, we expect a return disadvantage of three percentage points.
Retirement savings account alternative: The personal contribution should also amount to 100 euros, but with the new allowances (390 euros basic allowance with 1,200 euros personal contribution), invested in an MSCI World ETF. For this we calculate ETF and product costs of 1.0 percent. When it comes to returns, we base our returns on the historical development of the MSCI World since 1972. Since then, the index has achieved an average annual return of 7.2 percent. Seen this way, the net return is 6.2 percent.
When the retirement savings account starts on January 1, 2027, Hundreds of thousands of savers try to open a portfolio at the same time. The result: overloaded systems, long waiting times for identity verification, delayed activations. And every day of delay is a day without funding – because the allowances do not flow retroactively. Anyone who opens a free account at finanzen.net ZERO nowhas already completed the identity verification and can get started straight away on January 1st – no queue, no missed funding.
Generation 2002: The Lost Generation
Anyone who started with Riester in 2002 had the worst possible time – and was punished twice for it. The MSCI World initially crashed (dot-com bubble, 9/11), then recovered strongly, collapsed again in 2008 (subprime crisis, euro crisis) and then staged the longest rally in stock market history. Riester savers did not participate because the contribution guarantee forced their providers into bonds.
| Riester (reality) | Retirement savings account (counterfactual) | |
|---|---|---|
| Period | 2002–2026 (25 years) | 2002–2026 (25 years) |
| Total own contributions | €30,000 | €30,000 |
| Total allowances | €4,375 | €9,750 |
| Total tax savings | €5,229 | €1,281 |
| Net return (pa) | ~2.5% | ~6.2% |
| Depot value at the end of 2026 | ~€46,845 | ~€89,732 |
The Riester damage: around 43,000 euros. This is the difference between two retirement products. This is 43,000 euros, which Riester savers were not able to collect in our analysis. In short, with the retirement savings account, if it had existed in 2002, investors would have accumulated almost twice as much wealth for retirement provision. The reasons are clear:
- High product costs. Riester contracts were expensive. The high costs reduce the return.
- The contribution guarantee. Security costs money. Savers who wanted fixed contribution commitments paid for this with a lower return.
- Low-yield products. Due to the contribution guarantee, higher-yielding investments close to the capital market (such as stocks, ETFs and funds) had to be largely avoided.
For comparison: Anyone who had simply started an unsubsidized MSCI World savings plan in 2002 – without allowances, without tax advantages – would have around 70,000 euros today. Even without any support, the assets from a conventional ETF portfolio (without any government support) would be much higher.
Generation 2010: The lucky ones
The longest bull market in modern stock market history began in 2010.
| Riester | Retirement savings account | |
|---|---|---|
| Period | 15 years | 15 years |
| Personal contributions | €18,000 | €18,000 |
| Allowances | €2,625 | €5,850 |
| Total tax savings | €3,137 | €768 |
| Depot value | ~€24,592 | ~€37,578 |
Riester damage: around 12,986 euros in just 15 years. Or to put it another way: Riester cost these savers a return of almost 866 euros per year.
Generation 2015: Even short periods of time hurt
Even those who only started in 2015 and have only been geriestering for ten years can see a clear difference.
| Riester | Retirement savings account | |
|---|---|---|
| Period | 10 years | 10 years |
| Personal contributions | €12,000 | €12,000 |
| Allowances | €1,750 | €3,900 |
| Total tax savings | ~€2,091 | ~€512 |
| Depot value | ~€15,365 | ~€21,155 |
Riester damage: around 5,790 euros. Sounds like little at first. But if you take into account the rule of thumb that an investment should roughly double after ten years, the Riester contract has once again disappointed.
Infographic
The Riester damage ranges between just under 6,000 and around 43,000 euros – with a personal contribution of just 100 euros per month.
Why the difference is so big
Three effects multiply over time:
The double cost trap. Riester products typically cost 1.5 to 2.5 percent per year. In a retirement portfolio with a self-selected ETF, the costs are 0.1 to 0.2 percent (plus any product costs). Over 20 years, this difference alone costs tens of thousands of euros.
The guarantee brake. The mandatory 100 percent contribution guarantee forced Riester providers into bonds and guarantee funds. During the low interest rate period, this meant zero returns on the majority of the portfolio. There is no guarantee requirement in the retirement portfolio – 100 percent equity quota is possible.
The compound interest turbo. In the retirement savings account, the entire assets grow tax-free. Subsequent taxation only takes effect when you retire. By then, however, the compound interest effect has developed its full power. Zuckerl: Reallocations are possible at any time and do not trigger a tax event like with conventional portfolios.
What the numbers don’t show
This comparison has limits that we want to make transparent.
- The retirement savings account did not exist in 2002. The new allowances (50 cents/euro) and the tax-free savings phase are products of the 2026 reform. The comparison shows what would have been possible – not what would have been guaranteed.
- Also: Past MSCI World returns are no guarantee for the future. Anyone who opens a retirement savings account in 2027 doesn’t know whether the next 20 years will be similar. What we do know is that over every 15-year period since 1970, the MSCI World has achieved a positive return in the savings plan.
- And Riester definitely had advantages for a small group: low earners with several children received fixed allowances regardless of their own contribution. For them, Riester wasn’t a bad deal. For the majority of savers – singles, couples, high earners – that was it.
Riester contract transferred and up to 540 € funding secure.
From 2027, your Riester balance can be transferred to a retirement savings account with our broker finanzen.net ZERO – all previous allowances remain intact. Register now so you can be ready on January 1st.
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Conclusion: The lesson from 25 lost years
The Riester pension was well-intentioned but poorly implemented. The contribution guarantee that was supposed to protect investors has robbed them of returns. The high costs were an additional burden. The retirement savings account corrects both errors – and for the first time gives savers an instrument that combines government support with capital market returns.
Anyone who signed a Riester contract in 2002 and now looks at their portfolio will see what they have. Our table shows what he could have had. The difference is the price of failed reform. From 2027 there will be no excuses.
Assumptions: Single, no children, €100/month personal contribution. Riester: €175 basic allowance, 2.5% net return after costs (optimistic scenario). AVD: €390 basic allowance with €1,200 personal contribution, MSCI World ETF (0.2% TER, 0.8% product costs), historical return of the MSCI World since 1972 = 7.2% pa. All values before payout tax. The AVD after-tax return is below the values shown due to the subsequent taxation (assumed tax rate of 22.8% in retirement) – but the Riester damage remains in every constellation.
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