If you make provision for your old age with a Riester contract, you can receive allowances and tax benefits. The state supports your payments through allowances and, if applicable, additional tax relief through the special expenses deduction.

These allowances are available:

• Basic allowance of EUR 175.00 per year for each eligible person
• Child allowance of EUR 300.00 per year for each child born from 1.1.2008 (for children born up to 31.12.2007: EUR 185)
• One-off career entry bonus of EUR 200.00 (for persons directly entitled to an allowance who have not yet reached the age of 25 in the contribution year)

In order to receive the allowances in full, a certain minimum own contribution must be paid into your Riester contract. The minimum own contribution is 4 percent of your relevant income from the previous year (e.g. your gross income subject to pension insurance from the previous year). If the payments are lower, the allowance will be reduced proportionately.

Example:
Jutta Müller is an employee and has two children, both born after 2008. Her gross income in the previous year was EUR 35,000, which means:

• EUR 1,400 must be paid into the Riester contract each year for the full allowances (4 percent of EUR 35,000).
• Mrs. Müller receives EUR 775.00 in allowances (EUR 175.00 basic allowance + EUR 600.00 child allowance).
• Thanks to the allowances, she only has to pay EUR 625.00 into her Riester contract out of her own pocket (EUR 1,400 - EUR 775).

Tip: You can calculate your amounts using the "Riester calculator" from the German Pension Insurance Association. The calculator also takes into account the additional options for married spouses who are indirectly entitled to an allowance.
You can also apply for an additional special expense deduction from your local tax office as part of your income tax return.