Germany’s parliament Friday approved plans for the government to pay into pension accounts for children, with the funds invested in markets, marking a radical departure for Europe’s top economy.<div><br></div><div>Under the “Early Start Pension”, the state will pay 10 euros ($11) per month per child between the ages of six and 18 into an individual account invested in the financial markets.</div><div><br></div><div>Beneficiaries will not be able to access the money until they reach retirement age.</div><div><br></div><div>It should help take the strain off the existing, taxpayer-funded pension system, which is under pressure as the population ages.</div><div><br></div><div>“Children are our future,” German Chancellor Friedrich Merz said in a post on X.</div><div><br></div><div>“We’re leveraging the positive effects of the capital market for a long-term secure pension system.”</div><div><br></div><div>Investing the money into markets is a major shift for Europe’s top economy, which pioneered taxpayer-backed pensions under Chancellor Otto von Bismarck in the 1880s.</div><div><br></div><div>But pension payouts have become increasingly burdensome for taxpayers as the working population shrinks.</div><div><br></div><div>Births per woman in Germany have not been at or above the replacement rate of 2.1 since the 1970s, leading to a greying population.</div><div><br></div><div>Assuming an average annual seven-percent return on the total 1,440 euros paid in by the government, a retiree would have 53,000 euros, the government said.</div><div><br></div><div>Parents will be able to top up accounts and, if they add 50 euros a month, a child would have 300,000 euros at retirement, it added.</div><div><br></div><div>The Greens party and the far-left Die Linke voted against the bill, fearing it would boost inequality since better-off parents could pay more into accounts.</div><div><br></div><div>Though common in places like the United States and Australia, pensions backed by capital markets are controversial in cautious Germany where savers tend to prefer the perceived safety of cash.</div><div><br></div><div>Germans hold almost 40 percent of their household wealth in cash compared to an EU average of just over 30 percent, according to official data.</div><div><br></div><div>A commission established by the government has recommended introducing compulsory saving into market-backed pensions for the population as a whole.</div><div><br></div><div>Merz has said the government will implement the idea.</div>