Politics · Germany · 4 hrs ago
Germany approves monthly pension savings payments for children
Germany’s Bundestag approved the Frühstartrente, a scheme that helps children build private pension savings.
From 2027, children born in 2020 and later are due to receive €10 a month from the state from age six until they turn 18.
Families can add money, and if they do not choose an individual account, the German Federal Bank will manage the funds in a shared investment.
The money is invested in globally diversified shares or share funds, so its value can rise or fall.
The savings are intended for retirement, and generally cannot be paid out before age 65; by age 35, the accumulated funds can be moved into an individual pension account.
The government says the investment could grow to more than €50,000 by retirement, but that estimate assumes average returns and excludes inflation and later taxes.
The scheme is scheduled to begin in January 2027, with the first eligible group being children born in 2020.
Germany’s Bundestag has approved a monthly state payment to help children build private retirement savings.
The Frühstartrente is planned to begin on January 1, 2027, initially covering children born in 2020.
The state will contribute 10 euros per month from a child’s sixth birthday until the child turns 18.
The money is intended to remain invested until age 65, although the accumulated capital may be transferred to an individual retirement contract earlier.
The government says returns could increase the eventual value, but investment performance is uncertain and inflation and later taxes are not included in some projections.
- Who
- Children in Germany, starting with those born in 2020.
- What
- The state will pay 10 euros a month into a private retirement savings arrangement for each eligible child.
- When
- The scheme is planned to start on January 1, 2027, with payments from age six until 18.
- Where
- Germany.
- Why
- To encourage private retirement saving from childhood and make it easier to build up savings for later life.
This story does not have two clearly opposing sides.
The Bundestag approved the Frühstartrente with votes from CDU/CSU and SPD.
The law is planned to take effect, beginning coverage for children born in 2020.
- Monthly state payment
- 10 euros per child
- Payment period
- From age six until age 18
- First eligible birth year
- 2020
- Planned start date
- January 1, 2027
- Estimated public spending
- Around 1.2 billion euros from 2027 through 2030
7 sources
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