A leading youth wing of the Christian Democratic Union (CDU) has voiced significant concerns regarding the federal government’s proposed “Early Start Pension” initiative, urging the CDU leadership to undertake a fundamental revision of the plan. The critique, detailed in a position paper from the North Rhine-Westphalia state association and reported by “Focus” suggests the current design falls short of its intended goals.
The Early Start Pension, initially announced in the coalition agreement, aims to encourage private retirement savings among children. The current proposal involves the government contributing ten euros per month into a retirement savings account for each child between the ages of six and eighteen.
Kevin Gniosdorz, state chairman of the Junge Union (JU), stated that the current draft is “too unambitious”. He emphasized the need for an instrument that “strengthens self-responsibility, provides planning certainty and motivates individuals to proactively save for their future.
The North Rhine-Westphalia JU proposes a more extensive program. They advocate for the Early Start Pension to begin at birth and for state support to continue until the age of 25.
“Young people pursuing higher education or vocational training require ongoing support” explained JU Vice Chairwoman Ann-Cathrin Simon, justifying the expanded proposal. “Only with the earliest possible start, from birth, can the effect of compound interest fully unfold.
The coalition’s current plan allows individuals with Early Start Pension accounts to supplement their savings with further tax-advantaged contributions from the age of 18. Access to the accumulated funds is currently restricted until the statutory retirement age.
Following the age of 25, the JU envisions the Early Start Pension account transitioning into a savings and asset deposit account. This account could then be “managed independently and privately invested” with tax exemptions continuing on private contributions up to an annual limit of 4,000 euros upon withdrawal.
Departing from the coalition’s initial plans, the JU proposes allowing tax-free withdrawals before retirement, specifically for the acquisition of homeownership and financing higher education or vocational training. “This is the only way to make provisions flexible and adapt them to people’s life realities” Simon stated.
