Pension: Union wants an “early start” for private pension provision

The Union wants to achieve a broad breakthrough for more private pension provision and therefore set up a state-funded “early start pension” for children. Chancellor candidate Friedrich Merz (CDU) told the German Press Agency that it was easy to convey: “Start early with small amounts and leave them for a long time.” This ensures that you have a reasonable financial cushion in old age. In the program for the federal election, the CDU and CSU propose that every child between the ages of six and 18 should have ten euros paid into their own capital market portfolio every month as “starting assets”.

Merz made it clear that this should be more than symbolic support. “Anyone who would do that, and we would take it over from the state until they turned 18, would already have 2,100 euros in their account when they turned 18,” he explained, with a view to a possible annual return of six percent. If you leave this until you retire at the age of 67, this would result in 36,000 euros without any new payments. If you continue to pay in ten euros a month as an adult, you would end up with more than 70,000 euros.

Money only available at the start of retirement

Merz said it was particularly important to convey to young people “that they should save and, above all, that saving is really worth it.” The money paid into an individual account for each child should not be accessible to the parents, the state or the young people themselves – but only to them later when they retire. According to the Union scenario, anyone who pays in 50 euros instead of ten euros a month after their 18th birthday could end up with a capital of around 200,000 euros with an annual return of six percent.

With private payments after the age of 18 until retirement, the “early start pension” has its full effect through a return-oriented, capital-backed investment without guarantees, according to the Union’s election manifesto. Income from the portfolio should therefore be tax-free until retirement.

Digital answer to the former savings book

The CDU leader said: “We have to start with a funded pension scheme so that people are better protected in old age.” The decisive factor is: start early, save for a long time. “We in Germany finally have to understand this. Anyone who defames this as gambling is denying people the opportunity to build wealth.”

The planned ten euros per month as an investment in stock funds, for example, are “basically the answer to the savings account of the 1960s in the digital age of a democratized capital market,” said Merz. “The children get their own account number – just like they used to with a savings book – and can check at any time on their app or that of their parents how much has already been saved in the “early start pension”.”

“With around 700,000 young people per year, this costs seven million euros per month for each year,” said Merz about the financing. “Of course, that adds up over time. But it’s definitely cheaper than ever-increasing federal subsidies for pension insurance.”

“No pension cuts with the Union”

In the election manifesto, the Union explains that the statutory pension should be supplemented by additional company and private pension provision. “We are sticking to the existing legal regulations regarding retirement age.” The slightly earlier, deductible pension for particularly long-term insured people who have paid contributions for at least 45 years (formerly: “pension at 63”) should also be retained. The program emphasizes: “With the Union there will be no pension cuts.” The goals are “a stable pension level guaranteed by economic growth and continued rising pensions”.

With a view to increasing social security contributions overall, Merz spoke out in favor of more efficiency in the healthcare system. “We simply have to see that medical and technical progress offers enormous advantages for patients, but at the same time of course also entails enormous costs.” The following applies: “We need more efficiency in this system, as well as more personal responsibility. And above all, we have to digitize very consistently.” You can then make people an offer: “If you take advantage of this, you can very quickly reduce your own contributions.”