Germany launches pension accounts for children
The German government has approved a reform of the private pension system, including the introduction of the so-called Frühstart-Rente, an early-start pension scheme for children and adolescents, Qazinform News Agency correspondent reports.
The reform aims to modernize all three pillars of Germany’s pension system: public, occupational, and private. Particular emphasis is placed on expanding voluntary private savings that are accessible to all generations and income groups.
As part of the reform, Germany is phasing out the existing Riester pension scheme. It will be replaced by a simpler and more flexible private pension model designed also for people with little or no investment experience. A key innovation is the introduction of a pension investment account without strict guarantee requirements, creating opportunities for higher returns. At the same time, products with guaranteed capital repayment of 80 or 100 percent of contributions will remain available for citizens with higher security needs.
The system of state subsidies will also undergo significant changes. Instead of a fixed basic allowance of 175 euros, proportional support will be introduced. For each euro contributed up to 1,200 euros, the state will add 30 cents, while contributions of up to an additional 600 euros will receive 20 cents per euro. The maximum subsidized personal contribution will amount to 1,800 euros per year. From 2029, the subsidy for the first 1,200 euros will increase to 35 cents per euro saved.
One of the most notable elements of the reform is the Frühstart-Rente. Individual pension investment accounts will be opened for children and adolescents aged 6 to 18, with a guaranteed state contribution of 10 euros per month. These funds will serve as start-up capital for future retirement and will be invested within the new private pension framework.
If parents do not open an account for their child, a collective investment mechanism will be provided to ensure that entitlement to savings is preserved regardless of the family’s decision. If a personal account is opened later, the accumulated funds can be transferred to the individual contract.
The launch of the updated private pension system is scheduled for January 1, 2027. Payments under the Frühstart-Rente for children born in 2020 will be credited retroactively from January 1, 2026. From 2029, additional age groups not covered at the initial stage are expected to be included in the program.
The pension reform in Germany is being implemented amid a global demographic shift. As previously reported by Qazinform News Agency, the world has been facing an unprecedented rise in the number of elderly people in recent decades.
