State depot for children: This is how the early start pension works

• New pension package decided
• Early start-up pension should better secure future generations
• Practical implementation not concrete

A state depot for every child

With the early start pension, the Federal Government is planning a new model of private retirement provision from January 1, 2026. The state would like to deposit ten euros per month for children from 6 to the age of 18 in a personal depot if they attend a school or another educational institution. The amounts are to be invested in capital market products in the long term. So an “individual, capital -covered and privately organized retirement pot” is to be created, as the coalition agreement states. So far, it remains unclear who takes over the administration of the depot or in which investment classes are invested. Nevertheless, the saved capital should remain untouched to the pension and be paid out tax -free in old age. In addition, according to the coalition agreement, it is “protected against government access”. It is also stated that parents or other relatives from the age of 18 can make voluntary deposits. The contributions must not exceed an annual maximum amount.

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Access, exclusions and reach

The funding model is aimed at around 700,000 children per year. A total of around eight million young people could be included over twelve years. Access is linked to visiting an educational institution in Germany. Although there is still no precise definition, it can be assumed that pupils at general education schools, trainees or participants in certain further training could be eligible, according to Tagesschau.de. The uncertainty of how children or adolescents are involved with different educational channels ensures criticism. For example, anyone who completes a voluntary social year or at times do not attend educational institution may lose funding, Lukas Menkhoff from the German Institute for Economic Research (DIW) suspects in an interview with Tagesschau.de. But these children and adolescents “need money in old age”, says Menkhoff.

Another point of criticism concerns the financial impact. Economists question whether the model can make a substantial contribution to old -age provision in its current form. So Christoph M. Schmidt, President of the Leibniz-Instituts for economic research (RWI), in conversation with Tagesschau.de before “deceptive security”, since with a monthly funding of only 10 euros, supply gaps can arise even with optimistic returns. According to Schmidt, the early start pension thus distracts from the actual reform requirement of the pension system.

Financial burden and time pressure

The planned funding causes considerable costs, Friedrich Merz told the dpa news agency last year. Around 84 million euros will arise at ten euros per month. In the case of twelve years, the total amount is around one billion euros annually. So far, it has not yet been clarified how this sum should be permanently depicted in the federal budget. In view of the tense budget, the question arises for long -term financing security. “Germany faces massive challenges in financing our social systems, the necessary infrastructure investments and transformation to a climate -neutral economy. [Trotzdem plant die Regierung] A new output program in the billion dollar area instead of tackling the urgently needed reform of the statutory pension insurance, “criticizes Schmidt.

In addition, experts see problems with the schedule: “It should be difficult with the start of January 1,” the head of the Union Investment, Hans Joachim Reinke, told the Cooperative Fund House. The legal foundations, technical interfaces and investment products should be available by the beginning of 2026. Many consider this to be unrealistic, including CDU financial politicians Carsten Brodesser. At the request of Capital, he stated that the project would probably be delayed “for a few months”, since suitable offers from banks and insurers are still standing.

Idea with potential and limits

In terms of content, the model of the early start pension is generally welcomed from different sides. Menkhoff emphasizes that “children come into contact with shares early and thus lose their shyness is correct”. The President of the RWI argues against this: “The state wastes tax funds to regularly incur the recipients of these grants in any way to save or even do without.

Basically, there is skepticism. The criticism is less directed against the idea than against the concrete implementation. Small funding amounts, unclear incorporation criteria and lack of connection solutions endanger the effectiveness of the project. Whether the early start pension becomes an effective instrument for retirement provision or whether it only remains a symbolic project depends on the next steps of the federal government.

Editor finance.net