Retirement provision at 25 is early, but that is exactly what makes it effective: contributions have decades to grow. This guide shows you the three most important building blocks, Riester, occupational pension (betriebliche Altersvorsorge, bAV) and your own savings plan, with the rules and figures that apply as of October 2026.
Short answer: At 25 you can build up retirement provision through an occupational pension (bAV), a Riester contract or your own savings plan. As of October 2026, Riester pays a basic subsidy (Grundzulage) of 175 euros per year (current law). With an occupational pension, up to 4 percent of the contribution assessment ceiling (Beitragsbemessungsgrenze) can be converted free of social security contributions. For 2026 this is 4,056 euros a year. The conversion is tax-free up to 8 percent of the contribution assessment ceiling, which is 8,112 euros a year for 2026.
The key points in brief
- The statutory pension (gesetzliche Rente) usually does not replace your last salary. Additional provision therefore makes sense, even if the amount seems small at first.
- Riester subsidises your own contributions. The basic subsidy is 175 euros per year. The full subsidy requires that you pay in the minimum own contribution.
- With an occupational pension you convert part of your salary. Up to 4 percent of the contribution assessment ceiling stays free of social security contributions, and up to 8 percent is tax-free. If your employer saves social security contributions through the conversion, it must add 15 percent of the converted amount on top.
- Benefits are usually paid out at retirement age. Later payments from a company pension can trigger health insurance contributions.
- A new retirement depot (Altersvorsorgedepot) has been approved by the Bundestag and is expected to apply from 2027. Until it is promulgated and enters into force, today’s rules apply.
Which building blocks are there at 25, and how do they differ?
The three routes differ mainly in subsidies, commitment and access. The table shows the position as of October 2026. Changes from 2027 are marked separately.
| Building block | State support | Commitment and payout | Better suited if |
|---|---|---|---|
| Own savings plan, for example via securities | No subsidy, usually no special tax advantages | You decide yourself on amount, timing and sale | you want flexibility or have no occupational pension offer |
| Riester contract | Basic subsidy of 175 euros per year, child subsidy for children, tax advantage through the special expenses deduction | Payout generally in old age, with rules on conversion into a pension | you want to use the state subsidy and commit for the long term |
| Occupational pension (bAV) | Free of social security contributions up to 4 percent of the contribution assessment ceiling, tax-free up to 8 percent, 15 percent employer top-up where contributions are saved | Payout at retirement age, later health insurance contributions possible | your employer offers a bAV |
| Retirement depot (adopted, expected from 2027) | New basic subsidy and one-off bonus for contracts concluded before the age of 25, under the adopted law | Details to be checked individually once in force | you know the final rules and they fit your plan |
How does Riester work if you start at 25?
Riester is a state-subsidised private pension, also called Riester-Rente. You pay in yourself, and the state adds subsidies on top. To receive the full basic subsidy, you must make a minimum own contribution. It amounts to 4 percent of your gross income from the previous year that is subject to social insurance, minus the subsidies (§ 86 EStG). The subsidy is also capped at 2,100 euros per year (§ 10a EStG).
Worked example. Assumption: your gross income in the previous year was 30,000 euros. The minimum own contribution is then 1,200 euros per year. Of this, you pay 1,025 euros yourself, and the basic subsidy of 175 euros covers the rest. For low incomes the fixed subsidy is large in relation to your contribution. For higher incomes the tax advantage matters more. Which effect dominates for you depends on your income situation.
Riester ties you in for the long term. Later benefits are generally subject to deferred taxation, meaning income tax in old age. If you want to stay flexible, take this into account in your decision. The guide Retirement Provision for Students: Starting Early With Small Amounts shows how this can be combined with other building blocks.
Is an occupational pension worth it in your first job?
Many employers offer an occupational pension. The usual route is salary sacrifice (Entgeltumwandlung): part of your future salary goes straight into your pension provision. Under § 1a BetrAVG you can ask that up to 4 percent of the contribution assessment ceiling of the statutory pension insurance is converted. For 2026 this is 4,056 euros a year, or 338 euros a month (based on a contribution assessment ceiling of 8,450 euros per month, as of October 2026).
Your employer must add 15 percent of the converted amount as an employer contribution, to the extent that the conversion saves social security contributions (§ 1a Abs. 1a BetrAVG). Check this point with every offer.
For tax purposes, converted amounts remain tax-free up to the limit of 8 percent of the contribution assessment ceiling (§ 3 Nr. 63 EStG). They are free of social security contributions up to 4 percent (§ 1 Abs. 1 Nr. 9 SvEV). The benefit is taxed later. Health insurance contributions also play a role once benefits are paid. This is a separate topic that you should understand before you sign.
What you pay in yourself through salary sacrifice stays yours when you change jobs (§ 1b para. 5 BetrAVG). For parts that the employer co-finances, such as the top-up, the period under § 1b para. 1 BetrAVG may apply (promise in place for at least three years, age at least 21). A job change therefore does not automatically cost you the entitlement.
The retirement depot from 2027: what is settled so far
The Bundestag approved a reform of private retirement provision on 27 March 2026, and the Bundesrat consented on 8 May 2026. It provides for a retirement depot (Altersvorsorgedepot) with a new basic subsidy, expected to start on 1 January 2027 (Bundesrat document 445/26). For contracts concluded before the age of 25, the reform provides a one-off starter bonus of 200 euros. The reform is expected to apply from 2027 and is not current law for 2026. Check before you sign whether the details are implemented as planned. Until then, today’s rules apply, which means a Riester basic subsidy of 175 euros.
When does which building block fit, and when not?
- Riester fits if you want to take the subsidy and can commit for the long term. It is less suitable if you may need money flexibly in the coming years.
- The occupational pension fits if your employer pays a top-up and you can handle the reduction in your salary. It is less suitable if you cannot check the terms of the offer or plan to change jobs soon.
- Your own savings plan fits if you want flexibility and cannot or do not want to use subsidies. It brings no subsidy, but also no fixed commitment to subsidy rules.
Whether a building block suits you depends on your income, expenses and goals. You can request a personal assessment from Academycon, for example via How we work (in German). Checking your own contract documents does not replace this.
Frequently asked questions
Is Riester worth it on a low income?
On a low income the fixed basic subsidy is often large in relation to your own contribution. What matters is whether you can pay the minimum own contribution on a lasting basis. If you pay less, you receive the subsidy only in proportion.
Can I take an occupational pension with me when I change jobs?
The entitlement acquired through salary sacrifice remains in place (§ 1b para. 5 BetrAVG); for employer-financed parts, the vesting conditions (Unverfallbarkeit) of § 1b para. 1 BetrAVG may apply. How things continue depends on the implementation route. The contract can be transferred, made paid-up or continued. Have the consequences explained to you in writing before you change jobs.
Do I have to pay tax on Riester later?
Yes. Pensions from Riester contracts are generally subject to deferred taxation. The contributions are subsidised, and the later payouts are taxed. The best way to calculate your net figure is with the income and contributions calculator of the Federal Ministry of Finance.
Is a private savings plan enough without a subsidy?
A savings plan is flexible and not tied to subsidy rules. Whether it is enough depends on the savings rate, the time horizon and the goal. At 25 the head start in time is large, but market fluctuations have a stronger effect over short periods. A return cannot be guaranteed. You can find out how to start with a small budget in the guide Retirement Provision with 50 Euros a Month: A Realistic Start.
How much should I save at 25?
There is no standard figure. It helps to first secure your reserves and running costs, and then to plan a fixed amount that you can also pay in weaker months. Even small instalments have an effect over decades if they are paid regularly.
What to do now
- Ask your employer whether an occupational pension exists, which implementation routes are possible and whether a top-up is paid.
- For Riester, calculate the minimum own contribution based on your gross income from the previous year and check whether you can pay it on a lasting basis.
- Before a long-term commitment, check the status of the retirement depot, because the rules from 2027 are not yet in force.
- Compare costs, term and payout rules using the contract documents, not just promises.
- If you are unsure, get a personal assessment before you sign.
Related guides
- Retirement Provision for Students: Starting Early With Small Amounts
- Retirement Depot 2027: Subsidy and Bonus for Young People
- Retirement Provision with 50 Euros a Month: A Realistic Start
- Disability Insurance (BU) via Your Employer at Career Start
- Retirement Provision for Academics: The Right Order
Sources: § 1a BetrAVG (as of October 2026), § 3 Nr. 63 EStG (as of October 2026), § 1 Abs. 1 Nr. 9 SvEV (as of October 2026), § 1b BetrAVG (as of October 2026), § 10a EStG (as of October 2026), § 84 EStG (as of October 2026), Deutsche Rentenversicherung: Rechengrößen 2026 und 2027 (as of October 2026), Bundesrat document 445/26: reform of private retirement provision (as of May 2026).
Stand: October 2026. This guide is general information, not individual advice.
