What is the Frühstart-Rente? Definition and overview

Tilman Freyenhagen

Published on 28 July 2026 · Updated on 7 August 2026 · Managing Director & Partner, Alsterspree Verlag GmbH

Definition: what is the planned Frühstart-Rente?

The Frühstart-Rente is a planned state subsidy instrument for early retirement provision for children from age 6 up to age 18. The state is to pay 10 euros a month from the federal budget directly into a certified Altersvorsorgedepot, to give young people early access to the capital markets^[1]. On reaching adulthood, the accumulated balance is intended to transition seamlessly into the new system, building a solid foundation for retirement over several decades.

Key points and the government's Eckpunkte paper at a glance

• Basic state subsidy: The federal government is to pay in 10 euros a month over 12 years (1,440 euros in total base capital) for every eligible child.
• Certified Standarddepot: The funds flow into a privately run, capital-funded account with a provider of your choice.
• Automatic collective investment: If parents do not open an individual account, the federal government is to collect the subsidy and the Bundesbank is to invest the money collectively for all children.
• Additional own contributions: Families and relatives can further boost return potential through voluntary top-up payments. The limit for this is 6,840 euros per year.
• Tax-free accumulation phase: No tax is charged on returns throughout the entire accumulation phase.

Through the monthly state contribution, a total of 1,440 euros in pure basic subsidy flows into the child's account over the entire subsidy period. At an assumed average market return of 6 percent per year, this balance can grow to around 2,200 euros by the child's 18th birthday^[4]. If young adults then continue saving the capital as part of family subsidy support, the early start unfolds an enormous compound-interest effect over a saving period of 40 to 50 years.

The Frühstart-Rente is so far based on key policy points from the federal government; a dedicated draft law has been announced for 2026.^[5][9] On our portal, we keep you continuously updated on the current state of the legislation and support you in choosing the right path for retirement provision. Note on example calculations: all model calculations and return assumptions mentioned are for illustration only and do not represent a guaranteed return. This does not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Eckpunkte instead of a law: basis and timeline to the launch

The introduction of the Frühstart-Rente is closely tied to the broader reform of private retirement provision, but it is not part of the enacted Altersvorsorgereformgesetz (AVRG, the pension reform act): so far there are only cabinet key points, and a dedicated draft law has been announced for 2026. The official subsidy and sales launch of the subsidised account models is planned for 1 January 2027. In our role as an independent guide, we explain for you how the legislative groundwork is being laid and what steps take place before the launch.

Phased introduction and timeline

The launch is to begin with the 2020 birth cohort, which is set to be the first to receive the subsidy from age six.^[6] In the following years, one further birth cohort is to be gradually added to the system each year. This staggered timeline ensures that both the technical infrastructure at providers and the administrative processes of the responsible allowance office can ramp up in an orderly way.

• December 2025: Adoption of the key policy outline for the Frühstart-Rente and its link to the Altersvorsorgereformgesetz.
• Announced for 2026: Presentation of a dedicated draft law for the Frühstart-Rente by the federal government.
• Launch retroactive to 1 January 2026 under the key points: the state contribution payments (10 euros a month) are to apply retroactively from that date for the first birth cohort.
• In the following years: Annual expansion to include the next birth cohort of six-year-olds each year.

As soon as the subsidised child turns 18, the account is to transition seamlessly into the regular Altersvorsorgedepot from 2027. The accumulated capital remains earmarked within the retirement-provision system and benefits from the continuation options for young adults. For parents, this timeline means planning certainty: you can check early on whether opening an individual account for your child with a certified provider is an option, or whether the collective fallback solution applies for now.

State subsidy: how much are the contributions?

The planned state subsidy for the Frühstart-Rente provides for a monthly payment of €10 per child, equivalent to €120 per year.^[7] Over the entire subsidy period from age 6 to age 18, this direct state contribution adds up to a total of €1,440.^[8] A key feature of this scheme is the absence of any income limits for parents: every eligible child receives the allowance regardless of the parents' or guardians' income.

Subsidy structure and key figures at a glance

In addition to the basic state premium, the key policy points provide for voluntary top-up payments from relatives of up to €6,840 per year.^[9] This lets you deliberately strengthen the multi-decade compound-interest effect before the transition into the actual Altersvorsorgedepot. You can find further information on long-term planning in our guide for families with children. Note: this does not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Topping up with contributions from parents and relatives

The basic state amount of 10 euros a month is to lay the first building block for later retirement provision, for every child from age six. To make full use of the potential for long-term wealth building, the key policy points provide for additional private payments. Parents, grandparents, godparents or relatives can pay voluntary amounts directly into the account. The annual ceiling for such own contributions is 6,840 euros. Combining the state contribution with private savings payments substantially strengthens the compound-interest effect over the long term of several decades.

Options for private top-ups at a glance

The payment structure is designed to be flexible, so that families can tailor wealth building optimally to their financial situation. If you want to deliberately supplement the statutory family subsidy, several approaches are available:

• Monthly savings instalments: Even with manageable recurring amounts such as 25, 50 or 100 euros a month, parents build up additional investment capital step by step.
• Occasion-based one-off payments: Grandparents or other relatives can deliberately transfer cash gifts for birthdays, Christmas, starting school or confirmation into the retirement-provision account.
• Making full use of the allowance: Families who use the full annual ceiling of 6,840 euros build a solid financial foundation for their child even before they enter working life.

A key advantage lies in the tax treatment during the accumulation phase: all gains, dividends and price returns remain tax-free until the start of the later payout phase. This allows the capital to multiply over many years without any annual tax deduction. You can use our subsidy calculator tool to individually simulate what final amount is likely to result depending on your monthly top-up. Please note: all calculations and model calculations are for guidance and illustration only (this does not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG).

The Bundesbank's role in collective investment

If parents do not immediately open a private account with a certified provider once their child turns six, the state subsidy of 10 euros a month is by no means intended to be lost. The Federal Ministry of Finance's concept provides for an automatic fallback mechanism: if the funds are not claimed directly for an individual contract, the money is invested collectively, with low bureaucracy and low cost^[9]. This collective management is structured via the Deutsche Bundesbank, which invests the capital on the capital markets by birth cohort.

The three core phases of collective custody

• Uninterrupted saving process: From the start of the subsidy, the state secures the monthly 10 euros for every eligible child, without parents necessarily having to take action themselves.
• Investment by birth cohort: The amounts flow into collective investment pools, separated by birth cohort, which the Bundesbank invests on the capital markets on a return-oriented basis.
• Flexible contract transfer: As soon as parents, or the young person themselves after reaching adulthood, set up a personal Altersvorsorgedepot, the balance saved collectively up to that point is transferred in full to their own account.

This rule ensures that all children benefit from the capital markets' return potential, regardless of their parents' financial background or level of knowledge. However, the collective investment serves primarily as a safeguard against inaction. If you, as parents, open your own account early, you benefit from decisive advantages: only in an individual account can you or relatives pay in additional private contributions and shape the portfolio selection yourselves. To optimise the state amounts within the family, it is also worth looking at the general subsidy for families.

Transition into the Altersvorsorgedepot at age 18

On reaching adulthood, the state-subsidised children's account is to convert seamlessly into a regular Altersvorsorgedepot.^[9] The capital saved during childhood remains strictly earmarked and protected for retirement, and may not be withdrawn early for consumption purposes. From their 18th birthday, young adults take full control of the contract and can decide independently how to continue saving.

Rights, earmarking and options on reaching adulthood

From age 18, the monthly basic subsidy of 10 euros from the Frühstart-Rente ends, but the contract balance transitions directly into the regular system of private retirement provision. Young adults can now make their own contributions and benefit from the regular state subsidy structures. Anyone who starts making their own contributions early can, among other things, make use of the one-off Einstiegsbonus for career starters. In addition, the accumulated balance remains protected even if you switch account provider or temporarily pause contributions.

• Transfer of ownership: Legal control transfers fully from the parents to the now-adult child on their 18th birthday.
• Strict capital protection: The balance accumulated so far remains locked as retirement assets and cannot be dissolved early.
• Flexible continued saving: Adults can continue the account with their own funds, switch provider, or put it on hold.
• Transfer from collective investment: If the account was managed collectively during childhood, the units can be transferred into a personal Altersvorsorgedepot.

Through this seamless transition, the legislator ensures that the compound-interest effect built up in childhood is preserved without any taxable interim realisation. We recommend that young adults compare the various account and provider models neutrally after their 18th birthday, to tailor their individual retirement provision optimally to their first years of work or study.

Tax treatment and returns during the accumulation phase

Throughout the entire accumulation phase of the Frühstart-Rente and the subsequent Altersvorsorgedepot, families enjoy a decisive tax advantage: all returns are fully exempt from ongoing taxation. Neither capital gains nor distributions or dividends attract capital gains tax (Abgeltungsteuer) during the years of wealth building^[10]. All returns therefore remain in the account without restriction and are reinvested directly. For parents, this statutory rule means that the monthly state contribution of 10 euros, along with any own top-up payments, benefits from an uninterrupted compound-interest effect over the decades. We describe further details on the tax mechanics in our article on how it is tax-subsidised.

Comparing the tax logic: accumulation phase versus payout phase

• Accumulation phase (age 6 to 18 and the follow-on account): No capital gains tax (Abgeltungsteuer), solidarity surcharge or church tax on ongoing returns. All gains remain in full in the investment account.
• Seamless transition to adulthood: On reaching age 18, the account is transferred tax-neutrally into the regular Altersvorsorgedepot. No taxable realisation of gains takes place.
• Payout phase (retirement age): Deferred taxation only applies once retirement payments actually begin. The retiree pays tax on the payments at their then-personal tax rate.

The fundamental principle of subsidised retirement provision is based on the deferred-taxation model. This means the state does not tax the funds during the active accumulation phase, but only decades later, when the payout phase begins in retirement^[10]. When your child reaches retirement age and receives payments from the subsidised account, these payments are taxed according to the tax rules then in force, at their personal income tax rate. Because this rate is, based on experience, usually lower in retirement than during working years, an additional tax-deferral benefit arises alongside the compound-interest effect. For all calculations, please note: tax rules may change before retirement (this does not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG).

Next steps: how families can best prepare

Although the state Frühstart-Rente and the new Altersvorsorgedepot are only launching in phases, it is already worth preparing today as a parent. Taking early stock helps you assess existing savings contracts and integrate the future state subsidies purposefully into your family's long-term financial planning. Our knowledge section gives you a structured overview of the statutory framework and how it aligns with general family subsidy support.

Three concrete steps for optimal support for your children

1. Calculate your provision needs and subsidy entitlements: Use tools such as the subsidy calculator to work out how the state Kinderzulage and the monthly 10 euros from the Frühstart-Rente interact.
2. Set your own contributions and savings rate: Review your household budget to decide whether you want to supplement the state premium for your children with your own contributions of up to 6,840 euros per year.
3. Choose the right decision path: Decide whether, once the market launches, you want to manage the fund investment yourself via an online account or use our independent advice service for a tailored family strategy.

Through this structured planning, you ensure that your child benefits seamlessly from the state contributions from age 6 onward, and that the accumulated capital can be transferred seamlessly into a subsidised Altersvorsorgedepot on their 18th birthday. All projections and model calculations are for guidance only (this does not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG).