The German pension system is facing a decisive change. The traffic light parties plan to strengthen private pension provision with the retirement savings deposit from January 1, 2026.
The countdown for the German pension system has begun. Sociologists and economists have been pointing out the impact of demographic change on the pension system for several years. But instead of averting the danger, the problem has been passed from one government to the next in the hope that the problem would solve itself. Now, however, the debate seems to be gaining momentum.
There is a glimmer of hope in the coalition agreement of the traffic light government: the realization that the state pension alone will no longer be sufficient. The SPD, Greens and FDP want to further strengthen private pension provision with the so-called pension deposit. The planned start is already January 1, 2026.
In an interview with t-online, Thomas Soltau, head of the neobroker Smartbroker and member of the Digital Finance Forum (DFF) at the Federal Ministry of Finance, explains how the retirement savings account should work.
The retirement savings account is a deposit that any German citizen aged 18 or over can open with a depository provider of their choice, explains Thomas Soltau. “However, this special depository is different from other existing depositories, as it is explicitly designed to provide for my old age.”
Banks, savings banks, neobanks and brokers can be considered as providers of such a depository. Holders of a retirement savings depository should not be tied to one provider – it should be possible to switch an established retirement savings depository to another provider.
There should be no restriction to a single retirement savings account, says Soltau. This means that everyone can open several retirement savings accounts as long as they comply with the legal requirements.
The portfolio is to be structured in such a way that it is subject to a similar funding logic as the Riester pension: the amounts paid into the portfolio can be claimed for tax purposes up to a certain tax-free allowance each year. “The tax-free allowance that is currently being discussed is 2,100 euros, which is what is tax-deductible with Riester. That would be relatively little,” says Soltau.
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But the financial expert is certain: the draft law, which is expected in the next four to six weeks, will provide for a higher amount, probably between 4,000 and 6,000 euros. However, this is not an upper limit for deposits – more money can also flow into the deposit. The additional amount can then no longer be claimed for tax purposes. It is still unclear whether there will be an upper limit for deposits, as in other countries.
The purpose of such a retirement savings account is to generate profits by buying and selling securities such as stocks, equity funds or exchange-traded index funds (ETFs) in order to close or at least reduce the pension gap later on. The aim is for everyone to make additional provisions on a voluntary basis and invest money on the capital market.
To create a financial incentive, the profits from the sale of securities should remain in the portfolio, explains Soltau. “They do not have to be paid with the capital gains tax of 25 percent. The tax burden only arises at the end and therefore does not continuously reduce the income. The money can be fully reinvested in other securities without tax deductions. This creates a really enormous compound interest effect!”
The amounts paid out from the portfolio only have to be taxed when you retire. It has not yet been finally clarified how the payments will be made, whether regular and flexible payments are possible or whether a one-off payment is possible, says Soltau.
The question of what happens to capital gains tax if the retirement savings account is continued after retirement and money is paid into it, thereby generating profits, also still needs to be clarified.
The payout amount is likely to be subject to applicable income tax. Pensions are generally taxable, and any additional income, whether from a company pension or from capital gains, is credited towards the pension and must be taxed accordingly.
In principle, there should be the possibility of being able to access the money from the retirement savings account in an emergency, says Soltau. However, the retirement savings account is primarily intended for retirement provision. “If you withdraw it early, for example to buy a property or finance a trip around the world, you will most likely have to pay the resulting tax debt.”
