From 2027, the state in Germany is expected to pay children 10 euros per month toward their future pension.

The money would be invested and, according to calculations by the German Ministry of Finance, could grow to approximately 53,000 euros over several decades. As N1 writes, the Bundestag has passed the 'Frühstartrente' program, that is, early pension savings, with a planned start date of January 1, 2027.

Year of birth determines who receives support

State payments are planned from the age of 6 until adulthood, and the program begins with children born in 2020. Each following year, a new generation of six-year-olds would be included. Among the conditions are residence in Germany and a tax identification number. Children born before 2020 will not receive this support, so a child born in 2019 will not receive state payments, even though they are only one year older.

What do parents need to do?

Parents will be able to arrange a special investment account in the child's name, into which the state will pay money. Additional family contributions are also possible, for example from parents or grandparents. If parents do not open an account, state funds will be invested jointly, under the management of the Bundesbank. The right to transfer that money into one's own pension savings contract can be exercised until the age of 35, after which unclaimed funds are returned to the federal budget.

So where does 53,000 euros come from?

Over 12 years, the state would pay a total of 1,440 euros. The Ministry's calculation assumes an average annual return of 7%, under which about 2,200 euros would be accumulated by adulthood. If that money remains invested until the age of 65, without new contributions, it could grow to approximately 53,000 euros. The effect results from the long investment period and the reinvestment of earned returns, which can then themselves generate new returns.

However, 'returns are not guaranteed,' N1 states, and the state will not cover any potential losses. The calculation of 53,000 euros does not include inflation or tax at the time of later payout, so that amount does not represent today's purchasing power. The money also cannot be freely spent at age 18; as a rule, the payout is intended for the age of 65, with a предусмотрена possibility of earlier use for one's own residential property. For families, it is therefore crucial to understand that they are receiving the start of long-term pension savings, whose final value will depend on investment results.