€10 per month from the government, invested in equities, for every child between ages 6 and 17. No means test, no application: every child in Germany gets it. That is the Frühstart-Rente.
The concept: give every child a head start on pension savings by investing small amounts early enough for compound interest to do the heavy lifting. €10/month for 12 years (age 6 to 17) totals just €1,440 in government contributions. But invested in diversified equity funds and left to compound until retirement age 67, that €1,440 grows into €40,000-€80,000 depending on market returns.
The math that makes it work
A child starting at age 6 receives government contributions for 12 years:
- Total invested by government: €1,440
- Value at age 18 (6% return): ~€2,100
- Value at age 30 (no new contributions): ~€4,200
- Value at age 50: ~€13,500
- Value at age 67 (retirement): ~€30,500
At 8% average returns (which German equities have historically delivered): the final value exceeds €60,000 from just €1,440 in seed money.
How it differs from the Altersvorsorgedepot
The Frühstart-Rente is purely government-funded: parents contribute nothing. The Altersvorsorgedepot (starting 2027) is a separate, voluntary account where adults make their own contributions and receive state subsidies. They are complementary, not competing.
