'€10 a month': Germany to set up pension accounts for all children from age 6
With the planned introduction of an early start pension (
Frühstart-Rente
), the federal government aims to encourage school children in Germany to think about saving up for retirement from an early age.
The plan, which was included in the black-red coalition agreement between the conservative Union and the centre-left Social Democrat parties, is that every child attending school in Germany will get €10 per month paid into an individual pension portfolio in their name.
Payments would be made by the German state, and are due to start from the beginning of 2026.
How would early start pensions work?
The basic idea is that every schoolchild in Germany, from the age of six, gets a retirement provision account and that the state pays €10 into it monthly.
The aim is to provide children with access to the capital market at an early stage, and encourage them to think about building up assets in the long term.
According to current plans, these pension payments would be given to all children and young people in Germany between the ages of 6 and 17 who attend school. The money is to be put into an individual custody account, and remain tax-free until retirement.
Advertisement
From the age of 18, government payments would stop but children or parents and guardians could voluntarily make additional contributions to the account.
According to the conservative Union parties, which brought the proposal, the deposit should be "protected from state access" and should only be paid out when an account holder reaches the standard retirement age.
How much money are we talking about?
In twelve years, the monthly payments add up to €1,440 per child – before interest and returns.
An initial estimate by Sparkasse bank suggest that children who receive every payment could expect their account to be worth more than €100,000 by the time they retire at 67 without making any additional contributions of their own.
Here's how Sparkasse calculated:
Deposited money: €10 x 12 months x 12 years = €1,440
Assuming the Dax continues with a long-term return of about 8 percent per year, the custody account when the child is 18 years old would have €2,459.
If no further money is added, and the growth rate remains the same, by the age of 67 that same account would be worth approximately €107,000.
OR, if the account holder add a further €10 per month, by the age of 67 the portfolio would be worth around €175,000.
IN STATS:
Germans among the biggest money savers in the world
Will it work?
A number of details remain unclarified: Chiefly, how will the savings be invested and who will manage them?
Financial experts are not immediately convinced that the plan will really encourage more thoughtful money management among young people.
Advertisement
Johannes Geyer, deputy head of the public economics department at DIW Berlin,
told
the US news outlet
CNBC
that it's "unclear" if the early start pension scheme will increase motivation to save for old age.
'When people receive money passively and basically don't have to make any investment decisions themselves, it isn't obvious how their financial knowledge is meant to be improved," Geyer said.
Similarly Christoph Schmidt, president of the RWI Leibniz Institute for Economic Research, called the idea "well-intentioned," but added that, "looking more closely there are hardly any convincing benefits of the concept".
Still, many of Germany's current school children, and their parents, will surely appreciate the gesture.
READ ALSO:
German voters back raising hourly minimum wage to €15
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Local Germany
5 hours ago
- Local Germany
'€10 a month': Germany to set up pension accounts for all children from age 6
With the planned introduction of an early start pension ( Frühstart-Rente ), the federal government aims to encourage school children in Germany to think about saving up for retirement from an early age. The plan, which was included in the black-red coalition agreement between the conservative Union and the centre-left Social Democrat parties, is that every child attending school in Germany will get €10 per month paid into an individual pension portfolio in their name. Payments would be made by the German state, and are due to start from the beginning of 2026. How would early start pensions work? The basic idea is that every schoolchild in Germany, from the age of six, gets a retirement provision account and that the state pays €10 into it monthly. The aim is to provide children with access to the capital market at an early stage, and encourage them to think about building up assets in the long term. According to current plans, these pension payments would be given to all children and young people in Germany between the ages of 6 and 17 who attend school. The money is to be put into an individual custody account, and remain tax-free until retirement. Advertisement From the age of 18, government payments would stop but children or parents and guardians could voluntarily make additional contributions to the account. According to the conservative Union parties, which brought the proposal, the deposit should be "protected from state access" and should only be paid out when an account holder reaches the standard retirement age. How much money are we talking about? In twelve years, the monthly payments add up to €1,440 per child – before interest and returns. An initial estimate by Sparkasse bank suggest that children who receive every payment could expect their account to be worth more than €100,000 by the time they retire at 67 without making any additional contributions of their own. Here's how Sparkasse calculated: Deposited money: €10 x 12 months x 12 years = €1,440 Assuming the Dax continues with a long-term return of about 8 percent per year, the custody account when the child is 18 years old would have €2,459. If no further money is added, and the growth rate remains the same, by the age of 67 that same account would be worth approximately €107,000. OR, if the account holder add a further €10 per month, by the age of 67 the portfolio would be worth around €175,000. IN STATS: Germans among the biggest money savers in the world Will it work? A number of details remain unclarified: Chiefly, how will the savings be invested and who will manage them? Financial experts are not immediately convinced that the plan will really encourage more thoughtful money management among young people. Advertisement Johannes Geyer, deputy head of the public economics department at DIW Berlin, told the US news outlet CNBC that it's "unclear" if the early start pension scheme will increase motivation to save for old age. 'When people receive money passively and basically don't have to make any investment decisions themselves, it isn't obvious how their financial knowledge is meant to be improved," Geyer said. Similarly Christoph Schmidt, president of the RWI Leibniz Institute for Economic Research, called the idea "well-intentioned," but added that, "looking more closely there are hardly any convincing benefits of the concept". Still, many of Germany's current school children, and their parents, will surely appreciate the gesture. READ ALSO: German voters back raising hourly minimum wage to €15
DW
6 hours ago
- DW
Dispute with the Hohenzollerns ends after almost 100 years – DW – 06/17/2025
After years of debate, the state and the Hohenzollerns have reached a mutually beneficial deal over diverse art items, including paintings and furniture. An almost century-long dispute in Germany is coming to an end. The House of Hohenzollern — a German noble family to which the last German Emperor, Wilhelm II, also belonged — had long laid claim to various objects in German museums. They had also demanded millions in compensation for expropriated palaces and inventory. The whole thing went to court — until Georg Friedrich Prince of Prussia, the great-great-grandson of the last German emperor, finally changed the aristocratic house's strategy in 2023. He withdrew the compensation claims and thus cleared the way for out-of-court negotiations. The talks began in late 2024, resulting in the newly-reached agreement. Georg Friedrich Prince of Prussia, great-great-grandson of the last German emperor Image: picture-alliance/dpa/R. Hirschberger Works of art to remain in museums The new German Minister of State for Culture Wolfram Weimer (CDU) and Georg Friedrich Prince of Prussia had announced the breakthrough back in May 2025. The federal government and the states of Berlin and Brandenburg had reached an agreement with the former ruling house of Hohenzollern to set up the non-profit "Hohenzollern Art Foundation" to manage the previously reclaimed art and cultural objects. Now that the supervisory bodies of the Prussian Cultural Heritage Foundation and the German Historical Museum have also given their approval, the agreement has been signed and sealed. According to Weimer, the public will be the biggest winner. The collections that include around 3,000 objects will now feature in the German Historical Museum, along with museums run by the Prussian Palaces and Gardens Foundation Berlin-Brandenburg, and the Prussian Cultural Heritage Foundation. The new foundation will also manage the inventory — furniture, tableware and paintings — from around 70 palaces, villas and other properties in Berlin and Potsdam that were owned or used by the Hohenzollern family until 1945. There are also objects belonging to the family that were confiscated as early as 1918, after the end of the monarchy. #DailyDrone: Hohenzollern Castle To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The expropriation of the 'Junkers' At the end of World War II, Soviet troops conquered the former German territories east of the Elbe River and with them the bulk of the Hohenzollern territories. The Soviet Union regarded the "Junkers" — the land-owning nobility — as the class enemy and a pillar of the Nazi system. So in 1945, all noble houses in the Soviet occupation zone were expropriated without compensation. More than four decades later, the Berlin Wall fell and Germany was reunited. From one minute to the next, many former Hohenzollern castles and estates were once again on the Federal Republic's soil. But the German Unification Treaty in 1990 stated that the land reform of 1945 would not be reversed, meaning the Hohenzollerns had to write off their old properties in the east. Some 30 years later, the heirs of the last monarch demanded millions in compensation from the German state and the restitution of cultural assets — in vain. So the matter went to court. A painting of the last German Emperor Wilhelm II, painted by Philip de László in 1911 Image: Ralf Hirschberger/dpa/picture alliance Did the Hohenzollerns 'aid and abet' the Nazis? This question played a central role in the compensation dispute: Had representatives of the House of Hohenzollern colluded with the National Socialists who ruled Germany between 1933 and 1945? Specifically, had the heirs of the last German Emperor, Wilhelm II, who abdicated in 1918, "significantly supported" National Socialism? And what role did the son of the last monarch and former Crown Prince Wilhelm of Prussia play between the world wars? Did he help the Nazis come to power in order to re-establish the monarchy? The so-called "Compensation Act" of 1994, which regulates the compensation of landowners whose property was expropriated in the East in 1945, states that anyone who "significantly aided" Hitler and the Nazis has no right to compensation. In fact, historical documents prove Wilhelm's ties to Hitler, with photos and films showing the former crown prince with the dictator and other Nazi leaders. However, Wilhelm's hopes that the Nazis would crown him the new emperor were never realized and historians continue to debate Wilhelm's role in the Nazi state. What relationship did the House of Hohenzollern have with the Nazi regime? Image: akg-images/picture-alliance Seeking proximity with Hitler In their biographies, two German historians Lothar Machtan ("The Crown Prince and the Nazis") and Stephan Malinowski ("The Hohenzollerns and the Nazis") describe the crown prince as a radical anti-democrat who admired Mussolini and sought proximity to Hitler. His mission was to restore the monarchy. Malinowski and his colleague Peter Brandt concluded that Wilhelm of Prussia's behavior had "considerably aided and abetted" the establishment and consolidation of the National Socialist regime. In fact, the ex-crown prince called for the election of Hitler in the 1932 German presidential election. He later boasted to Hitler that he had procured him two million votes. Wilhelm also publicly demonstrated solidarity with the new elites. "The symbolic capital of the Hohenzollerns was very important for the Nazis in 1932/33, even if the crown prince had his own agenda in the process," said Jacco Pekelder, a historian from Münster, in a television interview." This is where the last German emperor spent his exile — at Doorn House in the Netherlands Image: Daniela Posdnjakova/DW Debate ongoing but settlement reached The editors of the anthology "Die Hohenzollerndebatte" (The Hohenzollern Debate), published in 2021, casted their doubt on these fascist ties. Historian Frank-Lothar Kroll attested to Wilhelm's "rather marginal commitment" to the Nazis. He may have pandered to Hitler, but he did not share his totalitarian ideology. For decades, hordes of lawyers, politicians and historians dealt with the restitution and compensation claims of the descendants of Wilhelm of Prussia. Now a settlement finally seems to have been reached, and the public could benefit the most. This is an updated version of an article originally written in German.
DW
7 hours ago
- DW
Large-scale energy storage facility opens in Germany – DW – 06/17/2025
A large battery storage system for renewable energy has gone online in northern Germany. The unit is one of the biggest in the country and can store enough power to run 170,000 homes for two hours. In northern Germany, one of the country's largest battery systems for storing power has gone online. It has a total power output of 103.5 megawatts, which is enough to run 170,000 homes for two hours. Managed by German-Norwegian company ECO STOR, the facility helps balance the electricity grid by storing excess energy from wind and solar sources and distributing it when needed. While such units help lower energy prices by storing cheap power for later use, critics worry about creating more storage capacity than is actually needed or can be used economically. This video summary was created by AI from the original DW script. It was edited by a journalist before publication.
