Canceling Riester pension: When is it sensible and what alternatives are there?
23 May 2025
4
Minutes
Katrin Straub
CEO at nextsure
Are you thinking about cancelling your Riester pension? This decision can be costly and is rarely the best solution. Find out the financial implications of cancelling and discover which alternatives might be more sensible.
The topic in brief and concise terms
Cancelling the Riester pension almost always results in financial losses due to the repayment of allowances and tax benefits, as well as any incurred fees.
Alternatives such as contribution suspension or switching providers are usually more sensible to retain the previous benefits and remain flexible.
Before considering termination, the long-term effects on retirement provision and all available options should always be carefully examined, ideally with professional advice.
Financial Pitfalls: The Direct Costs of Termination
Cancelling a Riester pension is almost always associated with financial losses. You must repay all government subsidies and tax benefits. In 2023, the average repayment amounted to around two thousand euros. Of this, approximately one thousand five hundred euros were for subsidies and over five hundred euros for tax benefits. Additionally, initiation, administration, and sales costs may occur, which your provider deducts from your balance. [_5,_6] These costs are often offset in the first five years of the contract. [_19]
The surrender value, meaning the amount you actually receive as a payout, can therefore be significantly less than your contributions paid in. [_4,_9] In some cases, the balance isn't even sufficient to cover all claims, meaning you might have to make additional payments. [_2,_9] The cancellation is considered "detrimental use of subsidies" as the capital no longer serves retirement provisions. [_1,_10] Therefore, this step should be carefully considered, as the taxes upon cancellation can further increase the financial burden. The precise calculation of the surrender value can take up to two months after your provider has contacted the Central Retirement Savings Allowance Office (ZfA). [_2,_4]
The termination process: Formal requirements and deadlines
If you want to terminate your Riester pension, you must do so in writing to your provider. [_11,_12] The notice period is usually six weeks before the desired exit month, but it can vary depending on the provider. [_6,_11] What matters is the receipt of the termination by the provider, not the dispatch date. [_12] Your termination letter should contain the following information:
Your contract number and personal details. [_15]
A clear statement regarding termination at the earliest possible date. [_12]
The revocation of the direct debit authorisation. [_11]
Your bank details (IBAN and BIC) for the payout of the remaining balance. [_11,_12]
Optionally, a deadline, for instance, fourteen days, for confirmation of the termination. [_12]
It is advisable to send the termination by registered mail with a return receipt to have proof. [_15] Bear in mind that terminating also removes the attachment protection of your Riester savings, which may be relevant if you have debts. [_19] Careful preparation of these documents can speed up the process. [_15]
Consider alternatives: Is cancelling really the best solution?
Before you cancel your Riester pension, you should definitely consider alternatives. Cancellation is often the least financially favourable option. [_3,_8] A commonly used alternative is contribution exemption. [_1,_16] In this case, you no longer pay contributions, but your previously accumulated capital, including the subsidies received, remains in the contract and continues to earn interest. [_16,_17] You will not receive any new subsidies or tax benefits during the exemption period. [_1,_17] An advantage is that you can reactivate the contract later. [_17]
Another possibility is to reduce your contributions, possibly to the minimum personal contribution of sixty euros per year, in order to continue to be entitled to the full basic allowance. [_1,_20] A contract for contribution exemption can also be a worthwhile option. If you are dissatisfied with the terms of your current contract, for example due to high costs or low returns, a change of provider might be worthwhile. [_1,_18] In this case, your balance will be transferred to a new contract without losing the previous subsidies. [_18,_19] These alternatives help to avoid the disadvantages of cancellation.
Premium waiver: gain flexibility, receive support
The suspension of contributions to your Riester pension is a flexible way to respond to financial constraints without completely surrendering the contract. [_17,_20] You stop making contributions, but the capital you have accumulated so far and the associated allowances remain yours. [_16,_17] The big advantage: You don't have to repay allowances or tax benefits. [_17] Your contract value can continue to grow through interest or fund developments. [_1] However, during the suspension period, you do not receive new government allowances and cannot claim further tax benefits. [_1,_17]
One disadvantage can be that the insolvency protection of the Riester funds lapses during the suspension if you no longer apply for allowances. [_2_] The future pension will naturally be lower due to the missing contributions. [_16] However, you can reactivate the contract at any time and continue making contributions. [_17] Suspending contributions is often a better solution than cancelling, especially if you wish to maintain the Riester pension for retirement provision. The application is usually possible in an informal manner with the provider. [_17]
Provider change: Take advantage of better conditions and yield opportunities
Switching your Riester provider can be worthwhile if you are struggling with high costs or an unsatisfactory return on your current contract. [_18,_21] By switching, you can transfer your accumulated balance to a new, potentially cheaper contract while maintaining the government subsidies. [_18,_25] The cost of switching can range from fifty to one hundred fifty euros with the old provider. [_21,_22] Additionally, initial costs may arise with the new provider unless you opt for a net tariff. [_21,_24]
It is important to know that the statutory contribution guarantee (return of all contributions and subsidies at the start of retirement) does not apply to the old contract when switching, but the transferred amount counts as a new guaranteed balance. [_22,_21_] If your contract balance is below the contribution guarantee, exempting contributions is often more sensible to avoid transferring losses to the new contract. [_1_] Switching to a Riester fund savings plan may be worth considering with a long remaining term and the hope of higher returns. [_4_,_21] Compare the conditions and Riester offers carefully before making a decision. The new provider usually handles the termination with the old contractual partner. [_5_,_25]
Special Cases: When Termination Can Be Considered Exceptionally
Although cancelling the Riester pension is generally disadvantageous, there are a few exceptional circumstances where it might be reconsidered. [_1_,_16_] Such a case might be a serious illness during the accumulation phase when the capital is needed elsewhere more urgently or intended to be inherited. [_16_] Additionally, with very small saved sums where management fees might exceed returns, or if no allowances have been claimed and the capital can be invested more profitably elsewhere, some consider termination. [_5_] However, even then, the repayment of the support is a significant drawback. [_1_]
Another exception is the commutation of a so-called small pension. [_10_] If the monthly pension in 2024 is no more than thirty-five point thirty-five euros, the provider can settle this as a lump sum without it being deemed detrimental to funding. [_10_] A partial capital payout of up to thirty percent at the beginning of the payout phase is also harmless. [_10_] However, before terminating for any of these reasons, you should consider the long-term impact on your retirement provision. Cancellation should always be the very last option. [_8]
Expert Tip: Long-term perspective and advice are crucial
The decision to terminate a Riester pension should never be taken lightly. The long-term consequences for your retirement planning often outweigh short-term financial relief. The Riester pension is a component of the three layers of retirement planning and aims to close the pension gap. Termination reopens this gap. Before taking action, obtain the current surrender value from your provider and have the financial implications clearly demonstrated to you. [_19]
Our expert tip: Always first consider alternatives such as contribution exemption or changing providers. These options often preserve your previous benefits and offer more flexibility. [_8,_19] Professional advice can assist you in finding the best solution for your individual situation and understanding the complexity of contracts. [_28_1871] Remember that even old insurance policies can sometimes be valuable. An informed decision protects your assets and your future pension.
Request individual risk analysis now: Have your insurance situation reviewed free of charge and receive concrete optimisation suggestions.
More useful links
Wikipedia provides a comprehensive overview of the Riester pension.
Deutsche Rentenversicherung informs about whether it makes sense to cancel the Riester contract.
Deutsche Rentenversicherung explains the possibility of pausing a Riester contract.
Deutsche Rentenversicherung describes how the payout of a Riester contract works.
Deutsche Rentenversicherung offers information on changing the provider or tariff for your Riester contract.
Verbraucherzentrale provides comprehensive information about the Riester pension and important aspects of private retirement planning.
Verbraucherzentrale gives advice on how to defend against inadmissible closing costs for Riester savings contracts.
Deutsche Rentenversicherung explains the determination of the repayment amount for Riester contracts.
Deutsche Rentenversicherung answers frequently asked questions about the Riester pension.
FAQ
How much money will I get back if I cancel my Riester pension?
You will receive what is known as the surrender value. This is often significantly lower than your contributions, as all government subsidies, tax benefits, and various contract costs are deducted. On average, savers had to repay around 2,000 euros in subsidies in 2023.
What deadlines do I need to consider when terminating a Riester pension?
The notice period is usually six weeks before the desired month of departure, but it may vary depending on the provider. The determinant factor is the receipt of the written termination notice by the provider.
Will I lose my tax benefits if I cancel the Riester pension?
Yes, all tax benefits received through the special expenses deduction must be repaid upon termination. Additionally, any profits generated may be subject to taxation. [1,2,_10_]
What are the advantages of contribution suspension compared to termination?
When contributions are suspended, the capital saved so far and the allowances received remain in the contract. No repayments are made. You simply stop making new contributions and do not receive any new incentives for this period.
Under what circumstances is switching providers for the Riester pension reasonable?
Switching providers can make sense if your current contract has high costs, yields low returns, or if you find better terms with another provider. The previous benefits remain intact.
Are there situations where cancelling your Riester pension might actually make sense?
A termination should only be considered in very rare exceptional cases, e.g., in the event of serious illness during the savings phase, very low contract sums, or if no promotions have been utilized. In most cases, the financial disadvantages clearly prevail. [16_,_5_]
