Germany advances €10‑per‑month “Frühstartrente” for children

The German coalition government has moved its Frühstartrente proposal into cabinet discussion. Under the draft law, the state will deposit €10 each month into an individual, capital‑funded pension account for every child aged six to 18. The first payments apply retroactively to the 2020 birth cohort from 1 January 2026, with each successive year’s six‑year‑old cohort added thereafter. Payments stop when the child turns 65, and the accrued capital remains tax‑free until then. Parents may top‑up the account with up to €6 840 per year.

Federal Finance Minister Lars Klingbeil said, “Wir wollen, dass alle besser und früher für das Alter vorsorgen können,” emphasizing the aim to reduce the gap between families with high income or assets and those without. The scheme creates a new market for insurance brokers and private providers, as outlined in an industry analysis, and establishes a collective “special fund” for children whose parents do not open an individual contract.

The Sozialverband Deutschland (SoVD) cautioned that the model is “risikobehaftet” and warned that it could primarily benefit financial institutions rather than the pension system itself. Nevertheless, the government presents the plan as a means to broaden private retirement savings and improve inter‑generational equity.