A prominent youth wing of the ruling party is calling for a significant overhaul of the federal government’s proposed “Early Start Pension” scheme, arguing the current plan falls short of its potential. The North Rhine-Westphalia state chapter of the Junge Union (JU) has issued a position paper, reported by “Focus” magazine, criticizing the initiative and urging the party leadership to reconsider its design.
The Early Start Pension, intended to encourage private retirement savings among children, currently envisions the state contributing ten euros monthly into a retirement account for each child between the ages of six and eighteen. JU leaders contend this approach is insufficient.
Kevin Gniosdorz, state chairman of JU North Rhine-Westphalia, stated that the scheme needs to be a tool that “strengthens individual responsibility, provides planning certainty and motivates people to save for themselves.
The youth wing proposes a radical shift from the coalition’s current plan. They advocate for the Early Start Pension to begin at birth and for state contributions to continue until the age of twenty-five.
“Young people pursuing education or vocational training require ongoing support” explained JU Vice Chairwoman Ann-Cathrin Simon, justifying the more extensive proposal. She emphasized that an earlier start would maximize the compounding interest effect.
Currently, the coalition’s plan allows individuals with Early Start Pension accounts to augment their savings with tax-advantaged contributions from the age of eighteen. Withdrawals are slated to be permitted only upon reaching the statutory retirement age.
The JU envisions that, upon reaching age twenty-five, the Early Start Pension account would transition into a broader savings and asset deposit account. This account would be “managed responsibly and privately supplemented” maintaining tax-free withdrawals up to 4,000 euros annually upon removal.
Differing from the coalition’s original concept, JU proposes allowing tax-free withdrawals before retirement, specifically to facilitate homeownership and to finance higher education or vocational training. “This is the only way to make provision flexible and adaptable to people’s life realities” Simon added.