Parents who plan provision for their child face a simple question with the early-start pension (Frühstart-Rente): is a depot of their own worth it, or should the money stay in the state solution? The act does not give a recommendation. It does regulate what happens if no depot is opened. This guide shows the differences and the open points.
In short: Under the Frühstartrentengesetz as adopted by the Bundestag on 16 October 2026 (Bundestag printed paper 21/8606), parents can open a depot with a financial institution of their choice. If no depot is opened, the funds are invested in a state collective investment vehicle that, under section 24 subsection 3, holds exclusively broadly diversified global equities or equity funds. Costs and returns cannot be derived. The Bundesrat and promulgation are pending. Last updated: November 2026.
Key points
- According to the Federal Pension Insurance Institution, parents choose a financial institution for the depot.
- Without an own depot, the funds go into a state collective investment vehicle that exists as a special fund from 1 January 2028 and invests exclusively in broadly diversified global equities or equity funds (section 24 subsection 3).
- Under the committee version, no sales and distribution costs may be charged on the early-start pension part of the contract until the payout phase begins (§ 3 subsection 2).
- The draft requires information on the cost and fee structure (§ 7a subsection 2).
- Payouts are in principle foreseen from age 65 at the earliest.
What is the difference between a depot and the state investment?
The Federal Pension Insurance Institution describes two routes: parents open a depot, or the money goes without a depot into a state collective investment vehicle. The choice therefore lies with the parents. Under the committee version (section 24 subsection 3), the state solution invests exclusively in broadly diversified global equities or equity funds, whereas the government draft required only global diversification. The special fund is to be set up on 1 January 2028 (section 22 subsection 1), and investors without a contract are to be informed at least three months before funds are returned (section 23 subsection 4). The government draft provides no return or loss guarantee (section 27).
| Feature | Own depot | No depot (state investment) |
|---|---|---|
| Choice of provider | Parents choose a financial institution | No choice; the funds go into the state investment |
| Costs | The draft requires information on the cost structure | No cost details in the draft; see the Federal Pension Insurance Institution |
| Transfer | Possible under the rules of the draft (§ 12) | See the Federal Pension Insurance Institution |
| Payout | In principle from age 65 at the earliest | In principle from age 65 at the earliest |
The table only summarises what the draft and the Federal Pension Insurance Institution state. Where information is missing, the table says so.
Is an own depot worth it for the child?
This question cannot be answered in general with the information available so far. An own depot offers the choice of provider and the chance to compare conditions. It can bring costs that work over many years. A return is not guaranteed, and nobody can predict it reliably for the coming decades.
For the decision, a simple comparison helps: how much room do you want to have, and how important is transparency on costs to you? If you do not want to deal with providers, the state solution may be the simpler path, provided that this is confirmed for your situation. A binding answer for your case comes from the Federal Pension Insurance Institution.
Only one qualifying contract per child is funded under section 13. A further contract is rejected, the contract date is decisive, and only a capital transfer under section 12 is an exception. Choosing the first provider is therefore more than a snapshot decision.What to watch on costs
- Sales and distribution costs: under the committee version they may not be charged on the early-start pension part of the contract until the payout phase begins, including on transfers (section 3 subsection 2).
- Ongoing costs: ask for the information on the cost and fee structure that the draft foresees in § 7a subsection 2.
- Transfer costs: ask what a later switch costs before you commit.
Compare the providers’ information using the same assumptions. A comparison that uses different periods or returns says little about the actual costs.
Which information should you request from a provider?
- The full contract terms, including the rules on termination and transfer.
- A list of all costs, one-off and ongoing, with the information on the cost and fee structure.
- Written confirmation whether the contract counts as qualifying and as certified.
- Information on the investment strategy and on how the provider handles price fluctuations.
If a provider does not supply these documents in full, that is a reason to keep looking. Good information is the basis of every decision, even when it does not look most appealing.
Why a comparison with a savings plan is difficult
A savings plan for the child follows its own rules. It has different costs and different access options, and it receives no state contribution. For this reason, comparing returns alone is not enough. The comparison of the early-start pension and a savings plan is covered in the guide on early-start pension or savings plan for the child (in German).
Often the more important question is what you can pay in over the long term, and whether the money should be tied up until age 65. A reserve for training is not foreseen with the early-start pension, because payouts are in principle only available from 65.
What does a later switch change?
If you want to change the depot later, learn the transfer rules before you choose the first depot. Under the draft, a transfer is foreseen up to adulthood only to another qualifying contract. That is a reason to check the first provider with a possible switch in mind. The rules in detail are explained in the guide on transfer to your own depot (in German).
Frequently asked questions
Is a depot compulsory?
According to the Federal Pension Insurance Institution, a depot is not a requirement, because without a depot the state investment applies. The federal government does not plan a separate application for the state subsidy, according to these statements.
Can I change the depot later?
Yes. Under § 12 of the draft, transfers are foreseen. Up to adulthood, only a complete transfer to another qualifying contract is foreseen. The details are in the guide on transfers (in German).
Is there a return guarantee?
The draft names no return. A depot depends on the development of capital markets. If you want guarantees, you must check the contract terms of the provider, because guarantees can differ.
Must I decide right away?
The Federal Pension Insurance Institution does not name a fixed date for the choice between a depot and the state investment on its page. Because a transfer up to adulthood is bound to deadlines, it is still worth deciding early and preparing the documents.
What does the state investment cost?
There is no fixed cost figure for the state investment, neither in the draft nor in the statements of the Federal Pension Insurance Institution. Ask the Institution for the current status before you decide, and compare the answer with the costs of an own depot.
What to do now
- Decide whether you want an own depot or prefer the state investment, and write down your reasons.
- Compare providers by costs, transfer options and the quality of their information.
- Wait for the final text of the law before you conclude a contract.
- Ask the Federal Pension Insurance Institution about open points.
Related guides
- Retirement 2027: The overview of depot, early-start pension and Riester
- Early-start pension or savings plan for the child
- Transfer the early-start pension to your own depot
- When is the early-start pension paid out?
- Which children receive the early-start pension first?
Sources: German Bundestag, printed paper 21/8606, committee report of the Finance Committee on the Frühstartrentengesetz (October 2026), German Bundestag, text archive, decision of 16 October 2026, Bundesrat printed paper 445/26, draft of a law introducing an early-start pension (14 August 2026) and Deutsche Rentenversicherung, early-start pension (page status 20 October 2026) (all in German)
Last updated: November 2026. This guide is general information, not individual advice.
