Early-Start Pension: Klingbeil Launches Draft Law for Capital-Funded Retirement Provision from Age Six

Structure and Functioning

Klingbeil described the early-start pension as a "wichtigen Beitrag für eine bessere Altersvorsorge". Early retirement provision today often depends on the income or wealth of the parents. "Diese Ungleichheit setzt sich dann oft bis ins Alter fort. Das wollen wir ändern." To the Funke Mediengruppe, he named as the central goal "Mehr Chancengleichheit".

According to calculations by the Finance Ministry, with monthly additional payments of ten euros from the parents, the depot value rises to around 4,400 euros at age 18 and to 107,000 euros at age 65. If the parents pay nothing in, the value is around 2,200 euros at 18 and around 53,000 euros at 65, according to the ministry. The returns are to be tax-free until the start of payouts. The projection figures take neither inflation nor taxation at payout into account.

Calculated Depot Values

The subsidised capital is to be paid out only after reaching the age of 65. After reaching the age of majority, the money can be transferred into another certified retirement provision contract according to the draft law, enabling a seamless transition into the tax-subsidised private retirement provision.

Federal expenditure on the early-start pension is to initially stand at 198 million euros per year and rise to 411 million euros by 2030. In early 2026, the Union and SPD in the Bundestag had agreed on changes to a draft by Klingbeil on reforming private retirement provision.

Costs and Riester Successor

The draft law also provides for a new successor to the unpopular Riester pension: a retirement provision depot that also enables higher returns on the capital market, with the state intending to subsidise investments in tiers according to the level of contributions. The declared goal of the black-red coalition is to make private retirement provision cheaper, simpler and less bureaucratic.

According to the news agency Reuters, older underage cohorts are not to receive any subsidies. Contracts can also be concluded for earlier birth cohorts under 18, but without state contributions. In principle, an application is not to be required. An originally announced catch-up provision from 2029 is no longer included in the draft law.

Older Cohorts Without Subsidies

In parallel, the federal government is preparing a major pension reform, primarily in the department of Social Minister Bärbel Bas (SPD). The basis is extensive proposals from an expert commission. According to the draft law, the early-start pension is also intended to strengthen financial literacy in Germany: the performance is to become "in ihren persönlichen Depots unmittelbar erlebbar" for young people.

From the year after entry into force, the new six-year-old cohort is to be admitted each year. This means the circle of eligible persons grows by one cohort annually. At the Federal Finance Ministry, the early-start pension is understood as an entry point into a comprehensive modernisation of capital-funded retirement provision, intended to make the system less dependent on the employment biography of the parents.