Germany's new equity pension (Aktienrente): Frühstart-Rente, Generationenkapital, Altersvorsorgedepot

Basics12 min read · updated 25 October 2026 · 21 sources

In Germany, Aktienrente (literally “equity pension”) refers to plans to build part of retirement provision through equities on the capital market. As of October 2026 there are three building blocks: the Generationenkapital (“generational capital”), planned in 2024 but never passed; the subsidised Altersvorsorgedepot (retirement savings account) from 2027; and the Frühstart-Rente (“early start pension”) of €10 a month for children, which the Bundestag passed in October 2026. Here you can read exactly what applies, how Sweden, Norway and Canada do it, what research says about costs and default funds, and what €10 a month can grow into. Not investment or pension advice.

Pay-as-you-go and funded pensions

The state pension works on a pay-as-you-go system: the contributions of today's workers pay today's pensions, and nothing is saved. In a funded pension system, every contribution is invested, and the later pension comes from the accumulated capital and its returns. Which system delivers more depends on a comparison of two growth rates:

Samuelson (1958) showed in an overlapping generations model that an intergenerational contract yields a return equal to population growth. Aaron (1966) added real wages: as long as n + g is above the interest rate, pay-as-you-go can make every generation better off. If the number of contributors shrinks, n turns negative and the calculation can tip the other way. Sinn (2000) therefore argues that funding can fill the gap left by missing contributors, but is no free gift: the claims from the pay-as-you-go system remain, and one generation has to pay twice during the transition.

As of October 2026: what has been passed

Sources: Federal Government, Generationenkapital (2024), Bundestag, Altersvorsorgedepot (2026), Federal Government, pension reform (2026), KPMG (2026), Bundestag, Frühstartrente (2026), Finance Committee (2026) and Federal Government, new rules January 2026 (2025). For the Frühstart-Rente, as of our information on 25 October 2026, the final reading in the Bundesrat (the upper house) was still pending; details may change until the law is promulgated.

Generationenkapital: the 2024 plan

The then Federal Government's Pension Package II provided for a Generationenkapital foundation (Federal Government, Generationenkapital 2024). The federal government was to lend it €12 billion in 2024 and 3% more each year after that. By 2036 this was to add up to around €200 billion, and from 2036 the foundation was to pay out an average of €10 billion a year to the statutory pension insurance to stabilise the contribution rate. The foundation's assets could temporarily have been transferred to the nuclear waste disposal fund (KENFO).

By our calculation, the loans from 2024 to 2035 would have totalled €12 billion × (1.03^12 − 1) / 0.03 = €170.3 billion; the returns would have had to make up the rest up to €200 billion. Because the money is borrowed, only the return above the federal government's interest costs would have been a gain. The bill was not passed before the end of the 20th legislative period and has therefore lapsed. The new Federal Government's pension bill of October 2025 names the Aktivrente and the Frühstart-Rente as further parts of the reform package; a Generationenkapital does not appear in it (Federal Government, pension package 2025 2025).

Altersvorsorgedepot: the Riester successor from 2027

The Pension Reform Act (Altersvorsorgereformgesetz) opens up state subsidies for an Altersvorsorgedepot (retirement savings account) without a guarantee requirement, for example with broadly diversified equity ETFs (Federal Government, pension reform 2026; Bundestag, Altersvorsorgedepot 2026). The key rules:

• Standard account: every provider must offer a low-cost standard product; costs are capped at 1.0%. The government draft still had 1.5%.
• Basic subsidy (Grundzulage): 50 cents per euro of your own contribution up to €360 a year, 25 cents per euro up to €1,800, so at most €540. You can pay in up to €6,840 a year; the subsidy does not rise beyond that.
• Child subsidy of €300 per child per year, paid in full from a contribution of just €25 a month; career starter bonus of €200 once if you sign up before your 25th birthday.
• Eligible in future are the self-employed as well; guarantee products remain possible.
• Payout: fixed-term annuities in addition to lifelong pensions; the tax deduction of contributions in the saving phase and deferred taxation of the benefits remain.
• Riester: from 2027 there will be no new Riester contracts (Germany's state-subsidised private pension); existing ones continue, and a voluntary switch is possible.

Frühstart-Rente: €10 a month for children

The Frühstart-Rente (early start pension) builds on the Altersvorsorgedepot (Bundestag, Frühstartrente 2026; Finance Committee 2026):

• Amount and age: €10 a month from the 6th to the 18th birthday for children resident in Germany with a tax identification number. The state pays the provider quarterly in arrears.
• Start: the law is to enter into force on 1 January 2027, and the first payments will be made in 2027 (Deutsche Rentenversicherung 2026). The first to be supported are children born in 2020 (for the first time for the year 2026) and 2021; after that, each year's cohort of six-year-olds is added.
• Investment: in a certified retirement savings contract in the child's name; no acquisition or distribution costs may be charged on the part from the Frühstart-Rente until the payout.
• Without a contract: from 1 January 2028, a special fund (Sondervermögen) at the Deutsche Bundesbank invests the money collectively, exclusively in broadly diversified global equities or equity funds. Money that is not transferred reverts to the federal government after the year of the 35th birthday.
• Access and taxes: as a rule, no payout before the 65th birthday; until then the returns remain tax-free, and the benefits are taxed on a deferred basis. From the age of majority, the capital can be transferred to a subsidised retirement savings contract.
• Your own contributions of up to €6,840 a year are possible.

Worked example: what €10 a month can grow into

Assume €30 per quarter from the 6th to the 18th birthday, then no further contributions until the 65th birthday. Each year the return is reduced by the costs: growth = (1 + return) × (1 − costs). The returns of 5% and 7% a year are round assumptions for a broad equity portfolio, not a forecast.

At 7% return and 0.5% costs, the model gives €2,129.99 at age 18. That is almost exactly the €2,131 the German Council of Economic Experts (Sachverständigenrat) arrives at with similar assumptions (Malmendier et al. 2025). We convert to purchasing power using 2% inflation over 59 years, and the payout as a constant monthly amount at 3% interest. If you wait until 67, you get two more years of growth. Your own contributions, from the parents or later from the child, change the picture more than any return assumption.

Role models: Sweden, Norway, Canada

• Sweden: each year, 16% of pensionable income goes into the income pension and 2.5% into the funded premium pension (Pensionsmyndigheten 2025). Anyone who does not choose funds ends up in the state default AP7 Såfa: fully in the equity fund until 55, then from 56 to 75 gradually up to two thirds in the fixed income fund; AP7 has just under six million savers (AP7 2026).
• Norway: despite its name, the Government Pension Fund Global is not fed by pension contributions but by oil and gas revenues; first deposit in 1996. Under the fiscal rule, the state may spend roughly the expected real return of around 3% a year (NBIM 2024). It is a role model for investing, not for financing a pension.
• Canada: CPP Investments invests the assets of the Canada Pension Plan. The base plan is partly funded, the additional plan fully; the benchmark for the base plan is a reference portfolio of 85% global equities and 15% Canadian government bonds (CPP Investments 2023).

The German model most closely resembles Sweden's, with the difference that the Frühstart-Rente is paid by the state rather than out of your own income, and the Altersvorsorgedepot remains voluntary.

For advanced readers: default funds, life cycle and sequence risk

Because most people make no active choice, the default determines the bulk of the assets. A good default is broadly diversified, cheap and adjusts risk to age, like AP7 Såfa with its glide path from equities to bonds. Dahlquist et al. (2018) calculate the optimal default fund for Sweden: compared with a common age-based allocation, it delivers a welfare gain of 1.5% in retirement, most of it already achievable with a simple rule of thumb.

Over 59 years, the risk of a pure equity portfolio is distributed differently than many people think: the dispersion of the final value grows over time, while the probability of a loss relative to the contributions falls. In simulations with historical data, a portfolio with 100% equities was below the sum of contributions after twelve years with a probability of only 7% (Malmendier et al. 2025). The critical point comes at the end: if the market falls shortly before or after retirement begins, it hits the largest pot of wealth (sequence-of-returns risk). That is why life-cycle models shift the allocation beforehand, and a payout spread over many years is more robust than selling everything in one go. How much you can safely withdraw later is covered in the article on the withdrawal rate.

What the research shows

The most important lessons come from Sweden. Cronqvist and Thaler (2004) evaluated the launch of the premium pension in 2000, when savers were encouraged to choose funds actively, and derive design rules, above all on how important a well-designed default fund is. How long such defaults have an effect is shown by Cronqvist et al. (2018), using all the choice and switching decisions of 7.3 million savers from 2000 to 2016: the effect lasted almost two decades. Similarly in the US: according to Madrian and Shea (2001), automatic enrolment significantly increases participation in workplace pension plans, and many people stick with the default contribution rate and the default fund.

For Germany, the Council of Economic Experts examined the Frühstart-Rente before the law was passed (Malmendier et al. 2025): it recommends enrolling all children automatically, a state default fund with opt-out, selecting funds primarily on cost and quality, and a cost cap. According to the authors, a cap of 1% would not be binding for most passive funds and ETFs, because their costs in the EU average below 0.5%. That costs make the biggest difference over decades is also shown by the worked example above.

Opportunities and criticism

• Opportunity for an equity culture: every child gets their own portfolio early on; studies on defaults suggest that many will keep it.
• Small amounts: €1,440 of state money is not much; without your own contributions, the Frühstart-Rente remains a top-up, not retirement provision.
• High cost cap: 1.0% is well above the costs of broad ETFs; in the example, the difference compared with 0.2% costs around a third of the final amount.
• Choice of provider: anyone who does not choose only ends up in the special fund from 2028; a great deal depends on how good the providers' standard offers are.
• Distribution: all children receive the same amount; in our assessment, the option to top up by up to €6,840 a year will be used mainly by families with money to spare.
• Sequence risk and access: the money is locked in until 65 and, at the end, exposed to the fluctuations of the stock market.
• Generationenkapital: a debt-financed sovereign fund only pays off if the return stays above the interest costs over the long run. That was the core of the criticism of the 2024 plans.

How Portfolio Lab calculates it

Portfolio Lab does not model subsidy rules with grants, cost caps or deferred taxation; the tax module calculates with the flat-rate withholding tax (Abgeltungsteuer) of an ordinary brokerage account. You can, however, play through the savings plan itself:

• Backtest: a contribution of €10 monthly, quarterly or annually over a historical period, plus ongoing additional costs per year on top of the TER (for example 0.8% to replicate an account at the cost cap).
• Monte Carlo: 2,000 possible future paths of up to 60 years with a fixed monthly contribution; shows the range of final values instead of a single number.
• Financial goals: a contribution with a “From” and “To” period (for example until the 18th birthday) and a goal in the year of the 65th birthday; as the return, the history of a portfolio or your own assumptions for return and volatility. A glide path between two portfolios replicates a life cycle like that of AP7 Såfa.

More on the calculation in the financial goals methodology; how contributions work over time is explained in compound interest and savings plan or lump sum, and a possible portfolio for decades in world portfolio.

This article explains a method; it is not investment or tax advice. Worked examples are simplified and rounded. All terms in the glossary.