Germany introduces pension accounts for children
The German government has approved a draft law to introduce the so-called early pension - Frühstartrente. It provides for the state to deposit €10 per month into children's individual pension savings accounts.
The Federal Cabinet adopted the decision on 12 August. To launch the program, the bill must still be considered by the Bundestag. The legislative procedure is planned to be completed by the end of 2026.
The first participants in the program will be children born in 2020 who will turn six in 2026. Payments for them are planned to be accrued retroactively from 1 January 2026. In the future, a new generation of six-year-old children will join the program each year.
The right to state contributions will be available to children aged six to the age of majority with their main residence in Germany. According to the text of the government's draft, citizenship is not a separate condition for participation, so the program may also extend to foreign children, in particular Ukrainians, who permanently reside in the country.
Parents will be able to open a special investment pension account for their child with a certified provider. In addition, relatives will be allowed to top up the account voluntarily - up to a total of €6,840 per year.
If parents do not open an individual account, the child will not lose the state contributions. The money will be automatically channelled into a collective investment fund managed by the German Federal Bank. The accumulated funds can later be transferred to a personal pension account.
Investment income will not be taxed until payouts begin. As a general rule, the accumulated savings can only be accessed after reaching the age of 65. Upon reaching the age of majority, the owner may continue to contribute to the account themselves or transfer the money to another certified pension product.
According to the German Ministry of Finance's calculations, the state contributions combined with investment income may amount to around €2,200 by the age of majority. If the funds remain invested without additional contributions, the sum could potentially grow to approximately €53,000 by retirement age. The actual result will depend on the investment returns.
Based on materials from: German Federal Ministry of Finance, Tagesschau
