Bundestag approves early-start pension of €10 a month per child

Children in Germany are to get a state-funded start on saving for retirement. Under the Frühstartrente, or early-start pension, which the Bundestag passed on 16 October 2026, the state will pay €10 a month for children aged 6 to 18 into an individual, funded pension savings account invested in the capital market. The scheme is due to take effect in January 2027 and starts with children born in 2020, the federal government said. According to the explanatory notes to the bill, those children receive the payments backdated for 2026; children born in 2021 join in 2027.

The Bundestag adopted the bill in the version amended by its Finance Committee, with the votes of the governing CDU/CSU and SPD, against the votes of the Greens and Die Linke, while the AfD abstained.

How it works

Parents open an account in the child's name with a provider of the reformed private pension products and can top it up voluntarily; the state grant is then paid automatically via the provider, without a further application, according to the government. Private contributions of up to €6,840 a year are possible. The contract can be concluded online and no advice is required, and the products follow the rules of the standard pension savings product (Standarddepot) of the private pension reform.

Children whose parents do not open an account are not left out. For them, the state invests €10 a month collectively on the capital market through a special federal fund, the Sondervermögen Frühstartrente, which is to be set up on 1 January 2028 and managed by the Bundesbank, Germany's central bank. The Finance Committee added a rule that the fund must invest exclusively in broadly diversified global equities or equity funds, so that it cannot be used to pursue other political goals. A child's share can later be transferred into a personal pension account until the age of 35.

Returns remain tax-free until the payout phase, and the subsidised capital can generally not be paid out before the age of 65. From the age of 18, young people can carry on saving in the tax-subsidised private pension products, which the government says are to be available from January 2027.

What it could be worth

The government has published an illustration that assumes an average nominal return of 7% a year. On those assumptions, the state money alone could grow to about €53,000 by retirement; if parents also paid in €50 a month, the account could exceed €300,000. Returns on the capital market are not fixed, and the government's own bill says the scheme is meant to show the role that risks and fluctuations play over long investment horizons.

Cost and criticism

The bill puts the cost at €198 million for 2027, rising to €411 million by 2030. Each year from 2027, the cohort of children turning six that year joins the scheme. Older children can have an account, but the state does not pay into it.

In the debate, Michael Thews of the SPD said the Bundestag was passing something historic and that the scheme would help many people build up a sensible pension. Fritz Güntzler of the CDU/CSU said it created an entry into funded private pension saving from the age of six. Ulrike Schielke-Ziesing of the AfD said it was neither early nor a pension, and that without extra payments from parents or grandparents it would amount to nothing. Stefan Schmidt of the Greens said it remained a crutch that cemented gaps in financial knowledge and social inequality, while Sarah Vollath of Die Linke said parents' money would still decide the chances children got.

What happens next

Like every bill the Bundestag adopts, the law now goes to the Bundesrat, the chamber of the 16 state governments. Its next plenary session is scheduled for 20 November 2026. For how the chamber handles federal laws, see our explainer on how the Bundesrat works.