Bundestag approves €10-monthly early retirement savings scheme for children
The German parliament passed a law that will have the state contribute €10 each month to a private retirement account for children, starting with the 2020 birth cohort.
The Bundestag has enacted a program that obliges the state to place €10 per month into a private retirement depot for every child, starting with the 2020 birth year. Implementation is phased: each year the cohort turning six joins the scheme, and contributions cease when the child turns 18, after which the savings move into a tax-advantaged pension vehicle. Payouts are scheduled to begin at age 65, and the state does not promise compensation if investment losses occur.
Parents and grandparents may make voluntary top-ups, subject to a cost cap of one percent and a maximum annual contribution ceiling. The plan is designed to harness compound interest over decades, with the finance ministry projecting substantial growth under a 7 % average return assumption. While the banking sector welcomes the initiative, trade unions criticize it as a means to recruit new financial-service customers.
Why it matters
It creates a state-backed long-term savings foundation for future retirees, affecting millions of German families.
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