The Union’s election program: New early start pension planned for all children

In the future, every six-year-old in Germany should be the owner of a depot, regardless of their parents’ income. The CDU and CSU want to ensure this if they win the federal election. The Union is planning a state-sponsored capital market depository for every child for retirement provision. The name of the project: early start pension.

This emerges from the finished text for the party’s election program. This is due to that star before. The Union’s program will be officially decided on December 17th. Chancellor candidate Friedrich Merz pushed the idea through in his party.

The draft election program agreed between the CDU and CSU leadership states: “Young people should make their own capital-funded provisions as early as possible.” That is why ten euros per month should be paid into a funded, privately organized retirement savings account for every child from the age of six to 18.

Unlike other models – such as basic inheritance – the money should not be paid out at the age of 18. Instead, the deposit should serve as retirement provision. “The amount saved during this time can be further saved through private payments from the age of 18 until retirement,” it says in the election program.

With the planned deposit of ten euros per month and an average return of six percent per year, every German child would have savings capital of 2,100 euros by the time they turn 18. By the time you retire, the capital would increase to 36,000 euros, even without any further deposits from the saver, simply due to the return expectations. That’s the theory.

From the age of 18, everyone can privately expand the depot planned by the Union until they retire. “Only in this way will the early start pension develop its full effect through return-oriented, capital-backed investments without guarantees,” says the election manifesto.

The Union promises: “The income from the portfolio should be tax-free until retirement.” The capital should be protected from state access, but cannot be paid out before the standard retirement age.

Anyone who continues to pay 10 euros a month privately from their 18th birthday would have saved around 70,000 euros when they retire. With a monthly deposit of 50 euros it would be 200,000 euros, with 100 euros per month it would be around 370,000 euros.

Germans are traditionally skeptical about stocks. Only one in six Germans invests money in stocks, funds or exchange-traded index funds (ETFs). The number has stagnated for years and is rather low in international comparison.

The Union wants to change that with the early start pension and get children and their parents used to stocks, funds and the capital market. At the same time, the deposit is intended to stabilize pensions for future generations. The Union reportedly wants to focus on those who will not retire for decades.

The Union’s initiative is similar to an economic idea. The Council of Economists presented a proposal in October that also included a payment of ten euros per month into a deposit between the ages of six and 18. In contrast to the Union’s plan, the money should be payable afterwards and continuing until retirement should only be an option.

In addition, the economists only expected a return of four percent per year. The conservatives, on the other hand, calculate their early start pension at an average of six percent. This roughly corresponds to the long-term average for large ETFs.

In these “Exchange Traded Funds” shares are purchased across a wide range. The risk is significantly lower than with purchases of individual stocks and is linked to the development of the overall market.

Friedrich Merz had already said at a startup association event on November 7th that he could imagine a state-sponsored capital market account for every child. “I haven’t been able to fully assert myself in the CDU yet, but that’s still to come,” said the candidate for chancellor at the time. He has now succeeded.

This Friday, the draft program will be sent to the party committees of the CDU and CSU. On December 17th, the two parties will meet for a joint board meeting in Berlin. The program for the federal election on February 23rd will be officially decided there.