Germany is planning to pay €10 a month into a personal investment account for every eligible school-aged child. The program is called the Frühstart-Rente (Early Start Pension).
The goal of Frühstart-Rente is to give children a head start on retirement savings.
What is the Frühstart-Rente?
It is a government-funded retirement savings program for children and young people in Germany. Parents or guardians can open an individual retirement savings account with a provider of their choice. The government will contribute €10 per month in this account for your child’s retirement.
The money is locked in until retirement age. You cannot access it earlier.
Here is a summary of Frühstart-Rente.
- Target group: 6- to 17-year-olds attending school or another educational institution in Germany
- Government subsidy: €10 per month
- Launch: January 1, 2027, with retroactive payments from January 1, 2026
- Own contributions: Possible from the 18th birthday, up to an annual maximum
- Payout: Only at retirement age. You cannot withdraw fund early
- Taxes: Returns are tax-free until retirement. Tax is only due when you start withdrawing in the retirement phase
- Protection: The savings capital is protected from state access
- Inheritance: If the account holder dies before retirement, the savings go to their heirs
- Low-income supplement: A €5 monthly top-up for low-income families is under discussion
When does the Frühstart-Rente start?
The Frühstart-Rente is expected to launch on January 1, 2027. However, eligible children will receive retroactive payments going back to January 1, 2026.
A draft law is expected to pass in 2026.
Who is eligible for Frühstart-Rente?
The program starts with children born in 2020. Each year, the next youngest cohort will be added.
More cohorts will potentially be included from 2029. However, it is unclear which cohorts they maybe.
NOTE: Children born before 2020 will not receive the government subsidy.
However, the special early retirement savings account will also be available for children born before 2020. This allows parents to make voluntary contributions and benefit from the same tax-free growth and provider terms.
What happens if parents don’t open an account for their children?
Your child can still access the money even if the you (parent) don’t open an account.
If you (parent or guardian) fail to open a retirement savings account, the money is directed into a collective fallback scheme. The investment strategy of this fallback will be simple, transparent, and replicable by third parties.
When your child reaches adulthood, they can claim their accumulated share and transfer it into a personal retirement savings contract.
How much could 10€ per month be worth in retirment?
The €10 a month sounds small. But the investment horizon here is at least 49 years. This gives enough time to your money to compound.
Assuming a 6% average annual return, you can expect:
- €36,312 at age 67 if no additional contributions are made after the government stops paying at 18.
- €205,352 at age 67 if the account holder also saves an additional €50 per month from the age of 18 onwards.
The total government contribution over 12 years adds up to just €1,440. By age 18, that money could already have grown to around €2,090 (assuming a 6% annual return).
What happens after the child turns 18?
The government stops contributing 10€ per month in the retirement account. But the account stays open.
Your child (the account holder) can continue saving themselves for their retirement. Your child can also switch the retirement account provider at low cost.You can find the official details on the Federal Finance Ministry’s website at bundesfinanzministerium.de.
Next steps
You don’t have to wait for the government to pass this law. You can start investing for your child now.
The easiest way is to open a free ETF savings plan.
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