Germany to add mandatory 2% pension capitalisation and phase out Riester scheme by 2027

Germany will introduce a mandatory 2 % capitalisation element to its public pension system from 2026, aiming to keep the replacement rate at roughly 48 % even as the statutory retirement age rises to 67. The change, modelled on Sweden’s system, will be driven by Chancellor Friedrich Merz and is intended to relieve future funding pressure on the federal budget.

At the same time, the Riester private‑pension scheme will be discontinued. From 1 January 2027 no new Riester contracts can be concluded. Existing contracts may continue unchanged, be cancelled, or be transferred to a new “Altersvorsorgedepot”, a state‑supported investment account that places savings in funds and ETFs. The transfer must be requested by the end of a quarter, and the old provider moves the balance directly to the new account without the saver receiving the money. The new depot retains all prior state subsidies, offers a standard‑depot option with limited fees, and expands eligibility to self‑employed professionals. Early preparation—opening a securities account and completing identity verification—can avoid delays and loss of subsidies when the depot launches.