Guest Article

Reshaping the Future of Private Pension Provision

A Comment on the planned Pension Investment Account (“Altersvorsorgedepot”)

By Iven Kurz, Founder & CEO of EVERGREEN

In September 2024, the German Ministry of Finance published its long-awaited draft bill to reform tax-subsidized private pension provision. A new certified Pension Investment Account (“Altersvorsorgedepot”) is planned to enhance the outdated Riester pension scheme, which has lost its appeal.

The aim is to offer a more transparent, flexible, and cost-effective way to save for retirement. For neobanks and fintechs, like EVERGREEN, this legislative shift opens up exciting opportunities to reshape the future of pension management.

Key Improvements over Riester Contracts

The state-subsidized Pension Investment Account (PIA) is scheduled to be introduced in January 2026. The main differences between the old Riester contracts and the new Pension Investment Accounts are planned to be the following:

• No capital guarantee for better returns: One of the most important changes is the removal of the capital guarantee requirement, which previously forced pension providers to ensure that savers received at least their initial contributions upon retirement. While this guarantee provided a sense of security, it also led to very conservative investment strategies that limited growth potential. By eliminating this constraint, the new law allows for higher-risk, higher-reward investments that better align with long-term market opportunities.

• Flexibility in investment: Unlike Riester contracts, which imposed strict limits on investment types, the new Pension Investment Account (PIA) will offer greater freedom to invest in diverse portfolios, including funds, ETFs and individual shares. This allows savers to tailor their portfolio according to personal risk tolerance and financial goals.

• More simplicity, transparency and lower costs: The Riester pension is characterized by high administrative effort and high product costs. The new bill aims to reduce administrative and management fees. Pension providers are now required to offer transparent, low-cost products that maximize value for savers.

An Overview: The New PIA/ “Altersvorsorgedepot”

The current draft of the legislation already defines some key details about what the PIA should look like in the future. Here are the most significant points:

• Basic allowance: Every euro of personal contribution is subsidized with 20 cents, or 20% of the investment. The minimum deposit is €120 per year. The maximum subsidizable deposit starts with €3,000 in 2026, increasing to €3,500 from 2030.

• Child allowance: Supplementary allowance per child of 25 cents for every euro of personal savings with a maximum of €300 euros per child.

• Bonus allowance: Young professionals get a bonus of €200 per year for a period of three years; low-income earners get a bonus of €175 per year – up to an income of €26,250 per year.

• Tax: All deposits and earnings are tax-exempt during the accumulation phase. Only upon payout do the amounts become taxable.

• Contracts are transferable: After five years, it shall be possible to switch providers without transfer costs from the outgoing provider.

• Payout phase: Savers have the choice between a lifetime annuity or – which is new – a payout plan up to the age of 85. The payout phase must start between the ages of 65 and 70. In the event of death, the assets can be transferred to a Pension Investment Account of their heirs.

• Riester: The transfer of old Riester contracts to a PIA shall be possible.

• Central comparison platform: Providers are required to transmit essential product information to a digital platform to gain more transparency in the market.

Opportunities for Fintechs and Neobanks

For fintechs and neobanks, the planned Pension Investment Account can be a game changer. It creates an opportunity to innovate and deliver better retirement solutions for consumers in a digital-first world.

Fintechs are digital by nature. They are experienced in building intuitive, user-friendly apps and platforms. This knowledge will help to make retirement planning easier and more engaging. Furthermore, fintechs can use their technology to offer personalized investment portfolios based on an individual’s risk appetite and financial goals. By using AI-driven insights and algorithms, platforms can optimize returns and provide tailored advice, ensuring that customers get the most out of their PIA.

In terms of costs, fintechs are usually able to offer economically priced options, as they mostly have lower overhead costs than traditional banks. And not to forget: The Pension Investment Account will likely foster collaboration between fintechs, traditional financial institutions, and other service providers. Companies will integrate their platforms with pension advisors, robo-advisors, or other tools that make retirement provision more accessible and attractive.

The Road Ahead

At EVERGREEN, we are excited about the potential that the Pension Investment Account offers. As an independent digital asset manager, we provide low-cost and globally diversified portfolios that help individuals grow their wealth over time. We are currently working on a pension provision tool, which will help to make saving outcomes more transparent and visible. The new PIA will allow us to expand our offerings and give consumers more flexibility and control over their retirement planning.

By now, the Pension Investment Account is still a draft bill, but it could be a significant step forward in Germany’s subsidized private pension system. We are convinced the demand will be promising – for several reasons. First of all, the allowances are rather attractive. Additionally, there is the fact that – due to demographic developments – more and more people need to engage with the topic of private retirement planning. Furthermore, the option to convert existing Riester contracts into a PIA will make it also extremely interesting for many customers.

For fintechs and neobanks, this reform creates an exciting opportunity to innovate, disrupt the status quo, and help individuals build a more secure financial future.

About the Author: Iven Kurz is the founder & CEO of EVERGREEN, a B Corp-certified fintech based in Leipzig, offering sustainable and globally diversified portfolios with a focus on transparency and long-term financial growth. Prior to this, he held managing positions in the private banking companies Metzler and Lampe.

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