Private retirement provision (private Altersvorsorge)

Level 2 · FoundationsDE · 2026 figures

German termprivate Altersvorsorge

Read firstThree pillars of retirement

Deep divesPrivate Savings · Riester-Rente · Rürup-Rente (Basisrente)

Private Altersvorsorge (private retirement provision) is the third pillar: assets or contractual benefits a person arranges outside statutory and occupational pension rights. It can use flexible investments, insurance-based lifetime income, or subsidized contracts. “Private” identifies who arranges it; it does not say that a product is suitable, low-cost, liquid, or guaranteed [1].

Evaluate functions, not labels

Criterion	Question
Goal	Flexible capital, lifelong income, inheritance, or a combination?
Access	Can money be used before retirement, and at what cost?
Risk	Who bears market, inflation, longevity, and provider risk?
Cost	What are acquisition, administration, investment, and exit costs?
Tax and subsidy	When is relief received, and how are benefits taxed?
Portability	What changes after leaving Germany?
Behaviour	Can contributions and allocation be maintained through stress?

A tax deduction or subsidy is one cash flow, not proof of value. Restrictions, fees, household tax rate, eligibility, and later taxation must enter the same calculation.

Worked classification

A flexible investment account offers access and transparent ownership but does not create lifelong income automatically. An annuity contract can transfer longevity risk but may reduce liquidity and inheritance. A subsidized contract can add public support while imposing product and payout rules.

No category wins every criterion. The planning sequence is: calculate the retirement-income gap, choose the function needed, then compare vehicles on consistent assumptions.

ConceptMeta links to the detailed private-retirement, Riester, and Rürup articles. Those pages hold the product mechanics and current 2026 rules.

Check yourself

What does pillar 3 describe?

Personally arranged retirement saving or insuranceOnly subsidized insurance contractsOnly employer pension plans

Does a tax deduction or subsidy prove a product is valuable?

Yes, in every householdNo; it is one cash flow in the full comparisonNo, because subsidies have zero value

Which trade-off distinguishes a flexible investment account from a lifetime annuity?

Liquidity versus transferring longevity riskBoth guarantee identical access and inheritanceNeither can have costs

What is the sound planning sequence?

Choose a product first, then invent the goalCalculate the gap, define the needed function, then compare vehiclesMaximize the headline tax deduction only

Sources

1. Bundesministerium für Arbeit und Soziales — Private Altersvorsorge, https://www.bmas.de/DE/Soziales/Rente-und-Altersvorsorge/Zusaetzliche-Altersvorsorge/Private-Altersvorsorge/private-altersvorsorge-alt.html (2026)
2. Deutsche Rentenversicherung — Additional retirement provision overview, https://www.deutsche-rentenversicherung.de/SharedDocs/Downloads/DE/Broschueren/national/altersvorsorge_heute_die_zukunft_planen.pdf (accessed 2026)