The Social Welfare Association of Germany (SoVD) has responded cautiously to plans put forward by Federal Minister of Finance Lars Klingbeil regarding the new early start pension.
Michaela Engelmeier, the chairwoman of the SoVD, told the Funke media group that the general idea of starting retirement planning from childhood is understandable and welcome. However, she questioned whether this must necessarily be accomplished through a “risky, capital-backed model.” The SoVD stated that this measure must not primarily benefit insurance corporations, as was seen with the Riester pension scheme. Engelmeier added that, from the SoVD’s perspective, it would have been more beneficial to concentrate efforts on strengthening the existing statutory pension and expanding it into an employment insurance system.
Klingbeil submitted the bill for the early start pension for departmental consultation on Wednesday. According to the document cited by the Funke media group, parents will be able to supplement the state subsidy of ten euros per month with up to 6,840 euros annually from their own funds. Furthermore, the draft provides for a state special fund for children whose parents do not open a personal savings account. Funds placed in this special fund will be invested until the child reaches adulthood, at which point the savings are intended to transfer into the planned retirement fund.
Klingbeil explained to the Funke newspapers that the goal is to allow everyone to provide for their retirement better and sooner. He emphasized that the government wants to support parents in planning for their children. “Today, too often, this depends on whether parents have high incomes or assets. This inequality often persists into old age. We want to change that,” he stated. According to him, the early start pension provides young people with a starting capital for private savings, which is a crucial contribution to improving retirement provision and increasing equal opportunities.
