Yes. Since the Riester pension is made up of untaxed income, the subsequent payments are subject to regular income tax. Thus, pensions are not only taxable at the rate of return (interest), as is the case with pension payments from a private pension insurance scheme, which are not supported by the state. Riester-funded pensions are fully taxable in old age.
For future pensioners, this means that if they have taken out a private pension insurance policy for which they pay contributions from taxed income, they only have to pay tax on the portion of income at retirement age. If, on the other hand, pensioners have chosen an investment form for which they have received state allowances, they must pay tax on the pension at their personal tax rate. And this is dependent on the pensioner's total income. This applies to all subsidized investments, i. e. both for insurance companies and fund or bank savings plans.
The good news: no final withholding tax. Although, for example, the gains of conventional fund savings plans have been subject to the flat-rate withholding tax since 2009, Riester fund savings plans are exempt from the flat-rate withholding tax. This also applies to the profits from the other Riester investments. At the beginning of the payout phase, the investor can dispose of the price gains without deduction of the final withholding tax. However, pensions must be taxed at the personal tax rate (post-taxation) which is based on total income.
Wohn-Riester: Complicated taxation. In the case of residentries, the subsequent taxation is applied. The contributions remain tax-free, only the pension itself has to be taxed - with its personal tax rate. And that makes things a bit more complicated for Wohn-Riester: the contributions and allowances, including assumed interest of two percent, are booked to an imaginary "housing promotion account". However, the saver cannot access the account, because the credit recorded there is put into real estate promotion and does not exist in principle any more. At the beginning of the "payout phase", i. e. when the other Riester savers - "conventional" - receive their pension and have to pay tax on this income, the resident priest saver also receives a notice of his tax liability, which has accumulated on the imaginary account in recent years. Then the owner-occupier has the choice: All at once tax, as a reward he gets a discount of 30 percent. Or taxation in stages: over a period of up to 23 years, he can pay his tax liability in installments, just like anyone receiving a regular Riester pension. Here, too, the tax rate is based on the total income of the pensioner.