Germany to launch new retirement savings depot in 2027

Germany is preparing for a significant reform of private retirement savings with the introduction of the Altersvorsorgedepot (AVD), scheduled to launch on January 1, 2027. Unlike previous Riester products, the new system does not mandate contribution guarantees, allowing capital to be more heavily invested in capital markets through funds and ETFs.

The reform includes a restructured state subsidy system. The government will provide a 50-cent subsidy for every euro contributed up to 360 euros annually, and a 25-cent subsidy for contributions up to 1,800 euros. Additional incentives include child allowances of up to 300 euros per child per year and a one-time 200-euro bonus for young professionals starting before age 25. The eligibility criteria are also expanding to include self-employed individuals and freelancers under certain conditions.

Financial institutions are positioning themselves for this transition. J. P. Morgan Asset Management has partnered with MorgenFund to provide innovative active solutions, such as actively managed ETFs and multi-alternative ELTIFs, to help private investors navigate the new landscape. While a low-cost standard depot will be available, the shift toward market-based investments is expected to increase the demand for specialized financial advice.