Germany proposes ‘early start pension’ for children

German Finance Minister Lars Klingbeil has introduced a draft law to the Bundestag for a new pension scheme known as ‘Frühstartrente’ (early start pension). Under this proposal, the state would deposit 10 euros per month into an individual capital-backed account for children aged six to 18.

The initiative aims to establish initial capital for retirement to ensure financial equality regardless of parental economic status. Projections suggest that through compound interest, the state contributions alone could accumulate to approximately 53,000 euros by age 65. If parents or relatives contribute an additional 20 euros monthly, the total could reach roughly 160,000 euros.

The scheme is intended to apply retroactively from January 1, 2026, for children born in 2020 or later. From 2027, children reaching age six would be automatically included. The government also plans to launch a financial education strategy to teach youth about capital markets. The program is estimated to cost the federal budget 198 million euros in 2027, rising to 411 million euros by 2030. If families do not set up private accounts, the Bundesbank may manage the investments.

The proposal has met with mixed reactions in parliament. The CDU/CSU has supported the move as a milestone for investment culture, while the AfD and the Greens have criticized it, with the AfD calling for higher monthly amounts and the Greens questioning the exclusion of children born before 2020.