Riester Child Allowance: How Parents Can Benefit from Government Subsidies
Riester Child Allowance: How Parents Can Benefit from Government Subsidies
Many parents want a solid retirement plan so they can better provide for their children—but what options does the government offer? The Riester child allowance is a worthwhile subsidy that provides families with up to 300 euros per child each year. It ensures that parents can plan for their own financial security and that of their children in the long term. At the same time, Riester savers benefit from tax advantages and greater planning security.
In this article, you’ll learn everything you need to know about the Riester child allowance, its eligibility requirements, and how to make the most of it to secure your child’s future.
We'll help you find the right investment for your child!
What is the Riester child allowance?
The Riester child allowance is a government subsidy designed specifically to help families with children build a solid retirement plan. It supplements the standard Riester basic allowance and is granted for each child eligible for child benefit. In this way, the government makes it easier for parents to plan for the future through the Riester pension.
Parents can apply for the child allowance for each of their children as long as they are eligible for child benefits. The application is typically submitted through the central office for retirement savings and credited directly to the Riester pension plan.
This subsidy is independent of gross income and helps to further increase the accumulated capital in the Riester pension plan each year. This makes the Riester child allowance an important component of a secure retirement plan—both for the parents themselves and for their children.
Amount of the child allowance: How much financial assistance is available?
The amount of the Riester child allowance depends on your child's year of birth:
- Parents receive an annual allowance of 185 euros per year for children born before 2008.
- For children born on or after January 1, 2008, the government subsidy increases to 300 euros per year—a noticeable difference that can add up to a significant amount over the years.
These amounts are paid into the Riester plan each year, thereby increasing the total savings.
The allowance is paid regardless of whether the parents receive the child benefit themselves or the other parent does, as long as it is applied for correctly and the minimum contribution (four percent of the previous year’s income subject to pension insurance, minus the allowances) has been paid.
- Particularly advantageous: Anyone who has submitted an application for a recurring allowance will automatically receive the child allowance each year—without having to reapply.
The amount of the subsidy also depends on the number of children for whom child benefit is paid. If a family has two children, both born after January 1, 2008, the annual subsidy from the child allowance alone totals 600 euros—in addition to the basic allowance of up to 175 euros.
Over the entire term of the Riester pension plan, this results in a substantial government subsidy that significantly boosts savings for retirement. In this way, parents benefit from government support in the long term while also laying a solid foundation for their children’s financial security.
Who is eligible for the child allowance?
As soon as you start receiving child benefit, you are also eligible for the Riester allowance. It doesn’t matter whether you are married, unmarried, or a single parent. Unless you request otherwise, the rule is that the parent who receives the child benefit is also the one who receives the Riester allowance. If you wish, you can also have the allowance transferred to the other parent’s Riester plan—this can be particularly useful if you’re developing a joint strategy or if the other plan offers better terms.
Entitlement to the child allowance is therefore closely linked to child benefit regulations. If your child benefit status changes—for example, following a separation or due to other family changes—responsibility for the child allowance may also shift. To ensure you don’t miss out on this government assistance, it’s a good idea to apply for a transfer of the allowance in a timely manner in such cases.
It is also important that you meet the general eligibility requirements for the Riester pension—that is, you must be subject to mandatory pension insurance or be employed in a comparable position (such as a civil servant, judge, or soldier). Only then can you benefit from the child allowance and strengthen your retirement savings for your child.
Requirements for receiving the full Rister child allowance
To receive the full child allowance, you must meet certain requirements that ensure you get the most out of the government subsidy. These requirements primarily relate to your Riester pension plan itself:
- Make the minimum contribution To receive the full tax credit, you must contribute at least 4 percent of your pension-insurance-subject income from the previous year (minus any tax credits) to your Riester pension plan. This ensures that the government rewards your initiative.
- Take the basic allowance into account In addition to the child allowance, you also receive the basic allowance of up to 175 euros per year. Both allowances are combined in your Riester plan, thereby increasing your savings. Please note that the minimum personal contribution is always based on the total amount (personal contribution plus allowances).
For example, if your gross annual income is 40,000 euros, your minimum personal contribution is 1,600 euros. You can deduct the government’s basic allowance and child allowance from this amount. This reduces the actual amount you have to pay yourself.
Tip: Check your information regularly, especially if there are changes to your income or family situation. This will ensure that you don’t miss out on any government benefits and that you can make the most of the Riester child allowance for your family.
How to Apply: Here's How to Receive the Child Allowance for Your Riester Pension
The Riester child allowance is not granted automatically—you must actively apply for it. There are two options: the Application for a Permanent Allowance and the annual individual application.
✅ Application for a permanent allowance: Apply once, enjoy the benefits forever
The automatic subsidy application is the most convenient option. With this option, you authorize your Riester provider to automatically apply for the subsidies—including the child subsidy—on your behalf each year. You can grant this authorization either when you sign the contract or at a later date.
Here's how it works:
- Fill out the form: Please provide your personal information, Social Security number, and details about your children who are eligible for child support.
- Grant power of attorney: Sign the power of attorney that allows your provider to apply for the subsidies on your behalf each year.
- Notify us of any changes: Let your provider know about any relevant changes, such as changes in income, marital status, or child support.
By submitting the application for ongoing benefits, you won't miss any deadlines and will automatically receive your benefits.
🗓️ Annual individual application: Manual application each year
If you haven't submitted an application for ongoing benefits, you'll need to apply for them yourself each year. Your provider will usually send you a form for this purpose.
Here's how to do it:
- Fill out the form: Enter your personal information, details about your child benefit, and information about your children.
- Please attach the supplementary form: Please include the supplementary form for the child allowance, providing the child allowance number and other relevant information.
- Please note the deadlines: The application must be submitted no later than the end of the second calendar year following the contribution year. For example: For the 2025 contribution year, you have until the end of 2027.
🔄 Transfer of child support to the other parent
By default, the parent who receives child benefit is also the one who receives the child allowance. If you wish to transfer the allowance to the other parent, you can do so by submitting a joint application. Both parents must agree to this and indicate their consent on the application.
📌 Important Notes
- Data currency: Keep your information up to date. Changes in your income, marital status, or child benefit eligibility may affect your allowances.
- Retroactive application: You can apply for the child allowance retroactively for up to two years.
- Contact the provider: If you have any questions or concerns, please contact your Riester provider. They will assist you with the application process and provide you with the necessary information.
If you follow these instructions for applying for the subsidy, the government will deposit the Riester subsidy into your Riester account either as a one-time payment for the year or on an ongoing basis—depending on the type of application you choose.
We'll help you find the right investment for your child!
- €25,703 more per child, thanks to our modern ETF strategy
- Find the perfect ETF investment for your child in a 30-minute video call from the comfort of your own home
- Sit back and watch your child’s wealth grow—our experts will take care of the rest
Tax Benefits of the Riester Pension
The Riester pension not only offers attractive government contributions but also tax benefits that can have a significant impact on your income. Here, you’ll learn how you can save on taxes with the Riester pension—and why the government subsidies are particularly beneficial for families.
- Deduction for special expenses In Germany, people can claim Riester contributions paid into a pension insurance plan as special deductions on their tax returns—up to a maximum of 2,100 euros per year (including government subsidies). This reduces your taxable income, allowing you to lower your tax burden.
- Automatic Best Price Check The tax office automatically performs what is known as a "most favorable option test." This determines whether the tax savings from the special expenses deduction are greater than the tax credits already granted. If so, the difference is credited to you as a tax refund. This way, you can be sure that you always receive the best benefit available to you—either the tax credits or the tax refund.
- Tax-free earnings during the savings phase Throughout the entire term of your Riester plan, your returns—that is, interest and capital gains—remain tax-free. This means your balance can grow unhindered. Only when you enter retirement and have your Riester balance paid out will it be taxed at your applicable personal tax rate at that time. This is particularly worthwhile if you expect to fall into a lower tax bracket in retirement.
- Flexibility in payouts Once you start receiving your pension, you can have up to 30 percent of your accumulated Riester savings paid out in a lump sum. This lump-sum payment is also taxable at first—though usually at a lower tax rate than when you were working. The remainder of the balance is paid out as a monthly pension and is also taxed on a deferred basis.
With the Riester tax benefit, the government not only helps you build your retirement savings, but also ensures that your commitment to your family’s future pays off tax-wise.
- Important tip: Be sure to include all your Riester plans and contributions accurately on your tax return. Your provider will issue you an annual statement for this purpose, which you can simply attach to your tax return. This ensures you receive the full tax benefits and make the most of the Riester subsidy.
Smartly combining the Riester allowance with investments for your children
If you’re a parent looking to secure your family’s financial future, you should keep an eye on both your own retirement savings and a targeted savings plan for your child. The Riester pension and the Invest4Kids concept offer an ideal combination that combines government subsidies with flexible savings options for your child combined.
With the Riester pension, you can secure your own retirement savings and benefit from government subsidies—including a child allowance as a bonus. At the same time, Invest4Kids offers you a flexible way to build up capital for your child in a targeted and tax-optimized manner. This way, you cover both key areas of family financial planning: your own retirement and your child’s financial security.
💡 Good to know
Invest4Kids helps you make the most of the government’s Riester child allowance to secure your child’s retirement. With our free, personalized consultation, we’ll also help you find the right, flexible investment options for your family—with no hidden costs and complete transparency. Schedule your no-obligation consultation today and learn how you can best secure your child’s future.
Conclusion: Making the Most of Your Riester Child Allowance
The Riester child allowance is an attractive option for your own Riester plan. With up to 300 euros per year per child, it allows you to boost your retirement savings. This government subsidy is paid directly into your Riester plan and helps you increase your retirement savings over the long term.
A major advantage: The subsidy is not based on your income and adds to your savings every year. If you meet the eligibility requirements and submit your application on time, you’ll receive the full subsidy—an ideal way to help secure your family’s future.
We'll help you find the right investment for your child!
- €25,703 more per child, thanks to our modern ETF strategy
- Find the perfect ETF investment for your child in a 30-minute video call from the comfort of your own home
- Sit back and watch your child’s wealth grow—our experts will take care of the rest
