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Local Germany
a day ago
- Business
- Local Germany
Q&A: What we know about Germany's plan to give kids pensions
With the planned introduction of an early start pension ( Frühstart-Rente ), the federal government wants to encourage school children in Germany to think about saving for retirement from an early age. Originally described in the black-red coalition agreement between the conservative Union and the centre-left Social Democrat parties as something the new government 'wanted' to do, ministers have decided to press ahead with legislation, with a view to launching the scheme in January 2026. The announcement raises a number of questions for international residents in Germany – not least whether children who attend German schools, but don't have German citizenship, will be eligible for the scheme. What exactly is being proposed? The plan is that every child attending school in Germany will get €10 per month paid into an individual pension portfolio in their name. This means every child from the ages of six to 17 - not just those starting school next year. When children turn 18, the government contributions would stop but individuals could make further contribution on their own if they wish. Savings in the accounts will remain tax-free until retirement, when individuals with accounts in their name would be able to access the pension funds. READ ALSO: '€10 a month' - Germany to set up pension accounts for all children from age 6 Will foreign children who attend German schools be included in the scheme? Under current plans, all children aged six to 17 who are enrolled in a German school – regardless of nationality – are expected to qualify for the new pension accounts. Advertisement This is consistent with the way other child-related benefits in Germany are structured, where residency and participation in the German education system are the key criteria, rather than citizenship. Do I have to opt-in & can I opt out? At present, the government has indicated that it intends to open savings accounts for all children who enrol in German schools automatically , suggesting there will be no need to opt-in to the scheme. It is currently unclear whether parents will be able to opt-out of the scheme on behalf of their children – an option which may be desirable for families who don't plan on staying long in Germany and would rather avoid the hassle of potentially needing to report on foreign investment accounts to the tax authorities in their home countries. EXPLAINED: Is it worthwhile to set up a private pension plan in Germany? What is the scheme supposed to achieve? Beyond giving the next generation something of a financial boost, the early start pension aims to improve the financial literacy and financial education of the population. An analysis by the economic policy publication Wirtschaftsdienst suggests that the plan could also strengthen the private, capital-covered pension provision through the use of compound interest effects. Under current plans, the capital can only be accessed upon reaching retirement age. Advertisement Some commentators have suggested the plan could further widen inequality in Germany, offering substantial additional benefits to people who can continue making contributions once the state stops (when the child reaches the age of 18). If no further payments are made after the age of 18, and assuming a rate of return of six percent a year, the account holder would have access to €36,320 on their 67th birthday. However, the beneficiary can look forward to receiving €374,520 if an additional €100 is added to the account each month from the age of 18. This assumes, of course, that the statutory retirement age in Germany remains 67. There are no current plans to raise the age of retirement in Germany again, but it is impossible to say what will happen over the next 61 years. A similar point holds true for the impact of inflation over the same period. Under current plans, the account holder will be able to access the savings when he or she reaches the age of retirement, whenever that is. Will it work? In some respects, it won't be possible to answer this question until 2087. In other respects, the first real test of the scheme will come 12 years after it begins, when data becomes available on the number of people who continue paying into the accounts. Advertisement Israel and the UK have both previously introduce similar schemes, but their focus was a bit different: Those were designed primarily to provide young adults with a financial cushion, with funds generally accessible from the age of 18. (The UK discontinued it's scheme in 2011, nine years after it was introduced in 2002.) Currently, money that is paid into pension pots today is used to pay at least a portion of the pensions drawn by people who have already retired. This situation is projected to become increasingly unsustainable as the average age in Germany continues to rise. READ ALSO: Why freelancers may have to pay into the German pension fund in future Estimated to cost less than €1 billion per school cohort, the Frühstart-Rente scheme can be seen as a relatively inexpensive, long-term attempt to mitigate the impact of this trend.
Straits Times
2 days ago
- Business
- Straits Times
Romania's next government likely to include all four pro-European parties, party leader says
Romania's President Nicusor Dan speaks during a press conference with Moldova's President Maia Sandu following their meeting in Chisinau, Moldova June 10, 2025. REUTERS/Vladislav Culiomza Romania's next government likely to include all four pro-European parties, party leader says BUCHAREST - Romania's new government will likely include all four of its pro-European parties after weeks of negotiations, centre-left Social Democrat leader Sorin Grindeanu said on Thursday following talks with centrist President Nicusor Dan. Dan won a divisive presidential election last month despite a strong challenge from the increasingly popular far-right but not before borrowing costs rose sharply and the leu currency crashed. He must now nominate a prime minister to tackle the highest budget deficit in the European Union, and the new government has until end-June to approve fiscal measures or risk a ratings downgrade from the last rung of investment grade. Dan's first choice for prime minister is Liberal Party leader Ilie Bolojan, who also has the backing of centre-right Save Romania Union and the ethnic Hungarian Party UDMR. But the centre-left Social Democrats, without whom a ruling majority cannot be achieved, have pushed back against the idea of supporting the leader of a different party for the post and have proposed a yet-to-be-agreed rotating premiership to run until Romania's next parliamentary election in 2028. "Based on what we discussed - economic measures and political agreement - things seem headed in the correct, constructive direction," Grindeanu told reporters after consultations with Dan, adding that he saw an 80%-90% chance that all four parties would form the next government. The European Commission, ratings agencies and analysts have said Romania cannot reduce its budget deficit over seven years to the EU's threshold of 3% of national output, as agreed, without hiking taxes. However, Dan and the four putative coalition parties have proved reluctant to enforce unpopular tax hikes, focusing instead on possible state spending cuts. The fiscal package will likely save around 30 billion lei ($6.85 billion) and entail an equal mix of spending cuts, postponed investments and tax hikes, politicians said. Sources have said the main value-added tax could rise to 21% from 19% despite vocal public opposition from Dan and party leaders. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Irish Independent
2 days ago
- Business
- Irish Independent
‘A total shambles' – renters will be the losers due to market reforms, Dáil told
TDs are this afternoon debating the Government's laws to designate the entire country a Rent Pressure Zone (RPZ), which will bring in rent caps to all properties. This will cap rent increases per year at 2pc or the rate of inflation, whichever is lower. Most opposition parties are supporting the laws, having called previously for the entire country to be designated an RPZ, but they also are putting forward their own amendments. Sinn Féin housing spokesperson Eoin Ó Broin said 'renters will be the losers' as a result of the changes. He said the plans were 'total shambles', 'haphazard' and 'back of the envelope'. 'You're going to make things worse in the short term,' he told the Dáil. He predicted there would be higher rents and no guarantee of increased supply. Mr Ó Broin said the 'best case scenario', which is aimed at driving fund investment in apartments for rent, would 'modest levels' of investments from abroad. His party colleague, Louise O'Reilly, told the Dáil how her father had attended the housing protest outside of Leinster House yesterday. She said he campaigned 56 years ago for better housing and that he had thought he would not have to still be doing so, five decades later. Labour TD Conor Sheehan said the announcement of the rent reform plans was 'nothing short of shambolic'. ADVERTISEMENT 'What was proposed last week nearly caused a run on the rental market,' he said. He said it 'really shows how weak' the Government was. Social Democrat TD Rory Hearne said the housing market didn't operate like any other market and it shouldn't be treated like it did. 'It's delusional thinking, it's market-like thinking that doesn't apply,' Mr Hearne told the Dáil. He said people 'need a home and people will pay whatever they can' to get one. 'Relying on institutional investors to provide a key source of housing is absolutely a wrong measure.' Junior housing minister Christopher O'Sullivan said the Government was bringing forward the laws quickly 'because renters need protection'. He said linking rents to inflation would be 'an immediate and concrete protection against high rent inflation'. 'We want to provide certainty, clarity and stability for the rental sector. The new policy measures announced last week to apply from March 1 will boost supply of homes.' He said laws would be brought forward later this year to give effect to the changes kicking in from March 1, which would include removing the 2pc rent cap from newly built apartments. New tenancies created after this date will be able to be set at 'market value' but will have 'far greater' protections for renters.
The Journal
3 days ago
- The Journal
North city parks becoming virtual no-go areas for council workers due to drug crime, TD says
THREE DUBLIN CITY parks are in danger of not being maintained as council workers say they are too dangerous to work in, a TD has claimed. Gary Gannon, the Social Democrats justice spokesman and a Dublin Central TD since 2020, has highlighted significant problems with violence and intimidation by young men engaged in the drugs trade in the north inner city. Speaking to The Journal , Gannon said that while extra gardaí have been deployed to the city centre successfully, he believes that there is a knock-on effect that local parks and communities in his area are under-policed. It was announced in March that a large number of gardaí, fresh from their training in Templemore, were being sent to Dublin to perform high-visibility patrols in the city. However Gannon says that a number of north city parks – Mountjoy Square, Diamond Park and Liberty Park – remain no-go areas for locals at certain times of day as a result of lack of policing. Anti-social behaviour in the three parks has been an issue for years, Gannon said, but the issue has been exacerbated in recent months. He said there are also problems with anti-social behaviour along the Grand Canal, running between North Wall and Croke Park. He said in those areas and in flat complexes around the area there is a significant problem with open drug dealing and drug-related intimidation. 'It doesn't seem to be policed,' Gannon said. 'There definitely has been an improvement in the commercial city centre. There's a lot more guards in there, but the displacement from other areas is being felt by communities in the north inner city. 'There is a lot of violence, open drug dealing that just seems to be tolerated, particularly in the park areas, and it's having a genuine impact,' he said. Gannon said that he and other local leaders have informed the gardaí and the Minister for Justice Jim O'Callaghan about the issue. 'We have a scenario now where council workers are telling us they won't go into the parks,' he said. Gannon said that he and other local people believe that there may be a policy by gardaí to contain the issues in local communities. Garda sources The Journal spoke to said that it is simply an issue with numbers of gardaí – and that there are simply not enough available to police the areas mentioned by the TD. Advertisement Social Democrat TD Gary Gannon. Alamy Stock Photo Alamy Stock Photo Drug intimidation While there is still drug debt intimidation, Gannon said that it has evolved and that now people who are moving drugs around the city are not being paid by gangs but instead are being forced to do it to pay off money owed. He said there is also a significant problem of young men and boys on scooters and scramblers who are moving drugs around the city. 'It's definitely got worse, but it's also got a lot more insidious. 'The guards have done very, very significant work in terms of breaking up the idea of the gangs but that has led to them innovating and they're having kids operating as drug mules – they're having people in their debt operating as drug mules. 'The gangs are no longer shooting at each other, and the guards should be commended for that, but the product they were fighting over in the first place is still there. 'Now the sale of that product is being done by people who are in very, very vulnerable situations – they are being exploited and groomed,' he said. Gannon called on O'Callaghan to treat the issue 'as if it was something that was happening in his own constituency over in Dublin 4″. Mountjoy Square, Dublin. Alamy Stock Photo Alamy Stock Photo Drive programme At a recent appearance before the Oireachtas justice committee Deputy Commissioner Shawna Coxon spoke about the measures gardaí are employing. 'We certainly have patrols all throughout the city from a family engagement standpoint, with respect to drug related intimidation. 'We know that many of these cases aren't reported, and I just want to signal that the Drive Program has just been released, where families have an opportunity that they can come to us if needs be, but oftentimes they're using other methods, and it's a great way for them to get help and support,' she said. The Drive Project (Drug Related Intimidation & Violence Engagement) is an interagency project to respond to the issue. The programme is funded by the Department of Health through its drug initiative and is designed to be a holistic response. O'Callaghan has, in the past, called for more gardaí in Dublin and also said that new technology is needed to better police the streets. He has also said there must be more robust work on knife crime. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
Local Germany
3 days ago
- Business
- Local Germany
'€10 a month': Germany to set up pension accounts for all children from age 6
With the planned introduction of an early start pension ( Frühstart-Rente ), the federal government aims to encourage school children in Germany to think about saving up for retirement from an early age. The plan, which was included in the black-red coalition agreement between the conservative Union and the centre-left Social Democrat parties, is that every child attending school in Germany will get €10 per month paid into an individual pension portfolio in their name. Payments would be made by the German state, and are due to start from the beginning of 2026. How would early start pensions work? The basic idea is that every schoolchild in Germany, from the age of six, gets a retirement provision account and that the state pays €10 into it monthly. The aim is to provide children with access to the capital market at an early stage, and encourage them to think about building up assets in the long term. According to current plans, these pension payments would be given to all children and young people in Germany between the ages of 6 and 17 who attend school. The money is to be put into an individual custody account, and remain tax-free until retirement. Advertisement From the age of 18, government payments would stop but children or parents and guardians could voluntarily make additional contributions to the account. According to the conservative Union parties, which brought the proposal, the deposit should be "protected from state access" and should only be paid out when an account holder reaches the standard retirement age. How much money are we talking about? In twelve years, the monthly payments add up to €1,440 per child – before interest and returns. An initial estimate by Sparkasse bank suggest that children who receive every payment could expect their account to be worth more than €100,000 by the time they retire at 67 without making any additional contributions of their own. Here's how Sparkasse calculated: Deposited money: €10 x 12 months x 12 years = €1,440 Assuming the Dax continues with a long-term return of about 8 percent per year, the custody account when the child is 18 years old would have €2,459. If no further money is added, and the growth rate remains the same, by the age of 67 that same account would be worth approximately €107,000. OR, if the account holder add a further €10 per month, by the age of 67 the portfolio would be worth around €175,000. IN STATS: Germans among the biggest money savers in the world Will it work? A number of details remain unclarified: Chiefly, how will the savings be invested and who will manage them? Financial experts are not immediately convinced that the plan will really encourage more thoughtful money management among young people. Advertisement Johannes Geyer, deputy head of the public economics department at DIW Berlin, told the US news outlet CNBC that it's "unclear" if the early start pension scheme will increase motivation to save for old age. 'When people receive money passively and basically don't have to make any investment decisions themselves, it isn't obvious how their financial knowledge is meant to be improved," Geyer said. Similarly Christoph Schmidt, president of the RWI Leibniz Institute for Economic Research, called the idea "well-intentioned," but added that, "looking more closely there are hardly any convincing benefits of the concept". Still, many of Germany's current school children, and their parents, will surely appreciate the gesture. READ ALSO: German voters back raising hourly minimum wage to €15
