The German federal government is moving forward with the introduction of the “Early Start Pension” (Frühstartrente), a scheme designed to provide children in Germany with seed capital for private retirement savings. The cabinet, led by Vice Chancellor Lars Klingbeil (SPD), approved the plans on Wednesday.
Under the new system, the federal government will contribute €10 monthly into a capital-backed retirement savings account for every child, from the age of six up until they turn 18. The purpose of the “Early Start Pension” is to help children build wealth independently of their parents. Funding is restricted exclusively to certified contracts that include an effective cost cap and no setup or sales fees until the child reaches adulthood. For children whose parents do not open an individual savings account, they will benefit from the state collective investment within the “Early Start Pension” framework.
Lars Klingbeil stated, “We want everyone to be able to plan for old age better and earlier.” He emphasized that children should be able to build wealth regardless of their family circumstances. “The Early Start Pension is an important contribution toward better retirement provisions and greater equality of opportunity.”
The returns generated by these accounts will remain tax-exempt until the payout phase, which can begin no earlier than the age of 65. Annual contributions can reach up to €6,840. This reform of private retirement savings is slated to begin in 2027.
