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A very interesting way to prepare and cater for retirement is the so-called “Riester” pension. It is a state-funded private pension and was founded in 2002 by the then Federal Minister of Social Affairs, Walter Riester. The active promotion by the state is documented and specified in § 10a of the Income Tax Act. It consists of state subsidies and savings paid into the contract count as special expenses and are therefore tax deductible. Each beneficiary will receive € 154 basic allowance. In addition, for each child born before 2008 families are granted a subsidy of € 185. Each child born from 2008 onwards, is subsidized with € 300 per year. The child subsidies are granted for as long as you claim child benefits. Young savers (up to 25 years) with a private Riester contract will also receive a one-time “Entry Level bonus” of € 200 in the first year.