Retirement saving in Germany compared: company pension, Rürup, Altersvorsorgedepot and ETF pension insurance versus an ETF savings plan

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If you are saving for retirement, you can use an ordinary ETF portfolio or a subsidised route: a company pension through salary sacrifice, the Rürup pension, from 2027 the Altersvorsorgedepot, or an ETF pension insurance policy. An honest retirement savings comparison calculates all of them with the same net outlay and looks at what actually arrives in retirement after taxes, social security contributions and costs. The result depends mainly on three numbers: your marginal tax rate today, your rate in retirement and the costs of the product. Here you will find the rules as of October 2026 and a fully worked example. Not tax or investment advice.

Five routes at a glance

Health and long-term care insurance: compulsory members of the health insurance scheme for pensioners (Krankenversicherung der Rentner) pay contributions on company pensions, because these count as pension-type income (Versorgungsbezüge); private pensions are not included (SGB V (1988), § 229). Voluntarily insured members pay on all their income. For the Altersvorsorgedepot, we assume that it is treated like Riester, Germany's existing state-subsidised private pension.

The ETF portfolio is taxed upfront: you save out of taxed income and later pay flat-rate tax only on the gains. The bAV, Rürup and the Altersvorsorgedepot follow deferred taxation: the contribution stays tax-free today, and later the entire benefit is taxed. If your tax rate in retirement is lower than today, the deferred option usually wins; costs and social security contributions shift the break-even point.

Company pension through salary sacrifice

• Tax exemption: contributions to a pension fund (Pensionsfonds), a Pensionskasse or a direct insurance policy (Direktversicherung) are tax-free up to 8% of the contribution assessment ceiling of the statutory pension insurance (EStG § 3 No. 63 2009); in 2026, that is 8% × €101,400 = €8,112 a year (Deutsche Rentenversicherung 2025).
• Exempt from social security contributions up to 4%, i.e. €4,056 (SvEV 2006). Up to this limit, you also have a legal right to salary sacrifice (Entgeltumwandlung), and your employer must add 15% of the converted amount to the extent that it saves social security contributions itself (BetrAVG § 1a 1974).
• In retirement, the benefits are fully taxable (§ 22 no. 5 EStG § 22 (2009)). For health insurance, they count as pension-type income at the full contribution rate: the general rate of 14.6% plus the additional contribution, 2.9% on average in 2026 (Federal Ministry of Health 2025), plus long-term care insurance at 3.6%, or 4.2% for people without children (Federal Ministry of Health 2026). In health insurance, an allowance of one twentieth of the reference value (Bezugsgröße) stays contribution-free, in 2026 €3,955 / 20 = €197.75 a month; a lump-sum payout is counted at one hundred-and-twentieth per month for ten years (SGB V (1988), §§ 226, 229).
• New in 2026: the Second Company Pensions Strengthening Act (Zweites Betriebsrentenstärkungsgesetz) was promulgated on 21 January 2026. It mainly extends opt-out models and, from 2027, the subsidy for low earners (Mercer 2026); the limits and the employer subsidy stay as they are.

Basisrente (Rürup pension)

The Basisrente, also known as the Rürup pension, is a private life annuity insurance with strict rules: it only pays a lifelong monthly pension, from age 62 at the earliest, and the entitlements must not be inheritable, transferable, usable as collateral, saleable or convertible into a lump sum (EStG §§ 10, 10a, 10c 2009). In return, since 2023 the contributions have been 100% deductible as special expenses, up to the maximum contribution to the miners' pension insurance (knappschaftliche Rentenversicherung). In 2026, that is €124,800 × 24.7% = €30,826 (rounded up) for single people, and double that for married couples (Deutsche Rentenversicherung 2025; DRV Knappschaft-Bahn-See 2026). Employees must subtract from this their entire contributions to the statutory pension insurance, both the employee and the employer share.

In retirement, the pension is taxed at the taxable share (Besteuerungsanteil) for the year in which it starts: 84% for a start in 2026, 0.5 percentage points more for each later cohort, and 100% from 2058 (EStG § 22 2009). So anyone who is 35 today and retires at 67 pays tax on the entire pension.

Riester and the new Altersvorsorgedepot

The Pension Reform Act (Altersvorsorgereformgesetz) has been passed: by the Bundestag on 27 March 2026 and by the Bundesrat on 8 May 2026; new products will be available from 1 January 2027 (Bundestag, Altersvorsorgedepot 2026; Federal Government, pension reform 2026). For Riester contracts concluded before 2027, the previous rules continue to apply (Bundestag Finance Committee 2026). The key features of the Altersvorsorgedepot (retirement savings account) in the version passed:

• Basic subsidy: 50% of your own contributions up to €360 and 25% up to €1,800, at most €540 a year; child subsidy of up to €300 per child; a minimum own contribution of €120 (Bundestag Finance Committee 2026).
• Special expense deduction under § 10a EStG (Income Tax Act) for up to €1,800 plus the subsidy; the tax office checks whether the deduction is worth more than the subsidy (Bundestag Finance Committee 2026).
• Standard account: every provider must offer one; the effective costs are capped at 1%, compared with 1.5% in the government draft (heute im bundestag 2026).
• Payout: a lifelong pension or a withdrawal plan; the benefits are fully taxed on a deferred basis (EStG § 22 (2009), no. 5).

The article Aktienrente shows how the subsidy works with small contributions. What matters for this comparison: at a marginal tax rate of 35%, the special expense deduction is worth more than the subsidy, and the Altersvorsorgedepot then works like a Rürup pension with a flexible payout and capped costs.

ETF pension insurance

During the saving phase of a fund-linked pension insurance policy, no tax is due, not even the Vorabpauschale. If you take the money as a lump sum, the difference between the payout and the contributions paid in is taxed, at your personal tax rate and only half of it, provided the contract ran for at least twelve years and you are at least 62 at payout (contracts from 2012). For fund-linked policies, an additional 15% of the difference is tax-free to the extent that it comes from investment income (§ 20(1) no. 6 EStG (2009)). The law does not say explicitly how the two rules interact; we calculate with 85% × 50% = 42.5% of the gain being taxable.

If you take a lifelong pension instead, only the taxable income portion (Ertragsanteil) is taxed: 18% for a pension starting at 65, 17% at 67 (EStG § 22 2009). That is favourable for tax purposes; the drawbacks lie in the costs of acquisition, administration and funds, and in the guaranteed annuity factor.

Worked example: €100 net outlay a month

The comparison is only fair if every route costs you the same. Assumptions (illustrative figures): aged 35, 32 years until retirement at 67, a net outlay of €1,200 every year, paid at the start of the year for simplicity. Marginal tax rate today 35%, in retirement 25% (excluding solidarity surcharge and church tax), employee share of social security contributions 21.15% (pension 9.3%, unemployment 1.3%, health 7.3% + 1.45%, long-term care 1.8%). Return of 6% a year before product costs, growth = 1.06 × (1 − costs). Costs per year: ETF portfolio 0.2%, Altersvorsorgedepot 0.6%, Rürup 1.0%, bAV and ETF pension insurance 1.2%.

What we compare is the net value at the start of retirement: the capital after all taxes and contributions due on the payout. For pensions, we assume that the payout converts the capital into an annuity at a fair rate and that the tax rate stays the same throughout retirement; the present value of the net pensions is then capital × (1 − deduction rate).

Under these assumptions, the bAV comes out ahead, followed by the Altersvorsorgedepot; the ETF pension insurance ends up behind the ETF portfolio despite its favourable taxation, because 1 percentage point more in costs over 32 years costs more than the tax saves. One item is still missing for the bAV: you pay no pension contributions on €2,736.60 a year. Measured against the provisional average earnings for 2026 of €51,944, that is 32 × 2,736.60 / 51,944 = 1.69 earnings points (Entgeltpunkte); at the current pension value of €42.52, this comes to around €71.68 of state pension a month in today's money (Deutsche Rentenversicherung 2025; Deutsche Rentenversicherung 2026). We have not deducted this loss.

What the result depends on

Above the contribution assessment ceiling of health insurance, salary sacrifice only saves pension and unemployment insurance contributions (10.6%); the bAV then falls behind Rürup and the Altersvorsorgedepot. Just 0.5 percentage points more in costs bring the Rürup pension in the example almost down to the level of the ETF portfolio.

For advanced readers: the formula behind the comparison

With the same net outlay N, every route can be reduced to three factors, namely the leverage when paying in, the growth after costs and the deduction at payout:

Without a cost difference, Rürup beats a tax-free portfolio exactly when t₁ < t₀. Deferred and upfront taxation are equivalent at the same tax rate. But because the ETF portfolio's gains are subject to the flat-rate tax, the break-even point shifts: in the example, Rürup is better up to a tax rate in retirement of 32.4%, and the bAV and the Altersvorsorgedepot up to around 37.6% and 37.8% respectively. Cost differences, by contrast, work through compounding: in the example, the ETF pension insurance, with 1 percentage point more in costs, has 18.8% less capital than the ETF portfolio after 32 years; a single lump-sum investment would lose 27.5%.

Two assumptions favour the contracts: the fair annuity conversion, even though insurers calculate with cautious mortality tables, and the constant tax rate, even though a high company pension itself raises the marginal tax rate in retirement. For the ETF portfolio, on the other hand, the calculation is strict: if you sell gradually in retirement, you use the saver's allowance (Sparer-Pauschbetrag) every year and defer the tax even further.

What the research shows

Whether subsidies increase saving or merely shift it around is an old question. Chetty et al. (2014) analysed 41 million observations from Denmark: tax subsidies mainly lead a small group of active savers to move their money from ordinary accounts into subsidised ones. Each dollar of subsidy raises saving by only about one cent. Automatic employer contributions, by contrast, increase wealth substantially, because around 85% of people save passively. According to Madrian and Shea (2001), automatic enrolment in company pension plans has a similar effect.

For Germany, Börsch-Supan et al. (2012) found that the Riester subsidy reached families well and low earners less well; in 2010, €9.4 billion of Riester savings compared with €3.5 billion of subsidy costs, and there was no sign of other savings being crowded out. On the payout side, Benartzi et al. (2011) show that only a few retirees annuitise voluntarily, even though a life annuity insures against living too long. Behavioural and institutional reasons play a major role here. According to Dammon et al. (2004), subsidised contracts should mainly hold tax-inefficient investments such as bonds.

Limits and common mistakes

• Comparing gross instead of net: €100 in the bAV does not cost you €100. Only the same net outlay makes the routes comparable.
• Forgetting contributions in retirement: for compulsorily insured members, company pensions attract around 21% for health and long-term care insurance, on top of income tax.
• Underestimating costs: one percentage point more a year costs more over decades than any tax advantage (see the ETF pension insurance in the example).
• Ignoring flexibility: Rürup money is locked in until 62 and only available as a pension; the ETF portfolio is there for you in case of unemployment, a home purchase or long-term care.
• Guessing the tax rate in retirement: if you expect a state pension, a company pension and rental income, your rate in retirement may well not be lower than today's.

The calculation is a simplified example and not tax or investment advice; what matters in your case are your employer's offer, the contract costs and your health insurance.

How Portfolio Lab calculates it

Portfolio Lab does not calculate subsidies, deferred taxation or social security contributions. The tax module only models a private portfolio, with flat-rate tax, partial exemption (Teilfreistellung), Vorabpauschale and saver's allowance. You can still try out building blocks of the comparison:

• Backtest: a savings plan with historical prices and “Additional costs p.a.” of 0 to 5% on top of the TER (for example 1.0% to model the costs of an insurance wrapper). With taxes switched on, you see the portfolio after flat-rate tax and, if you wish, after a sale at the end.
• Financial goals: a state pension, company pension or civil service pension as ongoing (net) income, and the withdrawals from the portfolio in a payment plan.
• ALM: the present value of future pensions at a fixed discount rate. This is useful for converting a monthly pension into capital.

More in Withdrawal rate, Sequence risk and the tax calculation methodology.

This article explains a method; it is not investment or tax advice. Worked examples are simplified and rounded. All terms in the glossary.