Germany is overhauling its state-subsidised retirement savings framework, and financial institutions have a firm deadline to prepare for. The federal government approved a pension reform law in late 2025, with parliamentary proceedings underway in 2026. If passed — which appears near-certain — the legislation will bring the Altersvorsorgedepot (AVD), or retirement provision depot, into force from 1 January 2027. From that date, no new contracts under the old Riester model will be permitted.

fincite, which offers an end-to-end digital asset management solution provider, recently delved into what the retirement savings depot really means for banks and insurance companies.

The Riester pension has long been criticised as bureaucratic, poorly communicated and structurally limited. Rigid contribution guarantees constrained returns and made the product difficult to sell.

The AVD breaks from that approach in several meaningful ways, fincite stated. Investment products including ETFs, individual stocks and actively managed funds will be directly eligible for state funding. The requirement for a 100% capital guarantee is dropped, replaced by three options: full guarantee, an 80% guarantee, or no guarantee at all.

State allowances of up to €480 per year remain in place, proportional to contributions made. Contracts can be concluded fully digitally, with no adviser required, and a simplified affordability and tax framework is intended to improve transparency. Providers will also be required to offer a standard product capped at 1.5% in total costs.

The market opportunity is significant. Germany currently has around 16 million active Riester contracts, many sitting in low-yielding products. Banks and asset managers that can offer AVD-compliant solutions from day one stand to benefit from both contract migration and new customer acquisition, particularly among younger demographics that have historically been underserved by traditional retirement savings products.

However, the technology challenge is considerable. Building a fully digital, regulatorily compliant AVD platform — covering MiFID II-compliant suitability assessments, KYC, eID integration, digital signatures, ZfA reporting for allowances and full compliance documentation — realistically takes between six and nine months. That means institutions that have not yet selected a platform by early 2026 risk missing the launch window entirely and entering a catch-up phase against first movers.

Source: fintech global