Pokojninska družba A, d.d. director of retirement solutions, Žiga Vižintin, argues that a one-sentence amendment to Slovenia’s pension law could allow parents to save for their children’s retirement, giving the next generation a crucial head start and easing future pension gaps

When German Chancellor, Friedrich Merz, recently proposed that parents should be able to save for their children’s retirement through subsidised equity savings plans, he provoked a stormy debate in Germany.

Trade unions dismissed the idea as unrealistic, while others saw it as a necessary step to prepare the next generation for demographic and financial pressures.

This debate resonates strongly in Slovenia. Our public pension system is also built on the Bismarck model and faces similar demographic challenges: An ageing population with ever more retirees and fewer active workers paying contributions.

Over the long term, this will widen the gap between public pension expenditures and employees’ contributions, which already today do not fully cover the costs. In 2024, Slovenia channelled around €1.4bn – about 10 per cent of the national budget – into covering public pension expenditures to keep them afloat. Clearly, sustainability concerns are not limited to Germany.

Yet, there is a remarkably simple way in which Slovenia could encourage long-term retirement saving – by amending a single article of the Pension and Disability Insurance Act (ZPIZ-2). Today, Article 215(1) states: “Only an insured person under the mandatory pension scheme, or a beneficiary of its rights, may join the supplementary pension scheme.”

In practice, this means parents cannot open a supplementary pension account in the name of their children. They often ask us whether they can – and we have to turn them away.

If the law were adjusted, parents could start saving in their child’s name, using the existing and proven second-pillar pension funds that have been operating successfully in Slovenia since 2001. Once the child enters the labour market, they could simply take over contributions to the same account.

The advantages are obvious:

• No need to reinvent the wheel. The framework of supplementary pension funds already exists, with transparent rules, professional management, and tax incentives.

• A head start in saving. If parents begin when a child is born, the account could benefit from 18, 20, or even 25 years of early accumulation before employment begins. Adding another 40 years of saving during working life means that assets could be invested for up to 65 years in total. The difference in outcomes between saving for 40 years versus 65 is enormous, thanks to the power of compounding.

• Financial literacy and responsibility. By opening pension accounts for their children, parents would not only build assets but also introduce them to the discipline of long-term saving. The hardest step – starting – would already be done.

From a policy perspective, this would also support the broader goals of the European Commission’s Savings and Investments Union initiative, which aims to mobilise household savings into capital markets across the EU. Pension funds are natural long-term investors, and every additional euro invested strengthens both domestic and European capital markets.

In short, a one-sentence legislative amendment could unlock a significant opportunity: empowering parents to save for their children’s retirement within a tested and trusted framework.

It would address a clear demand from savers, create a culture of early and disciplined investing, and ultimately reduce future pension gaps. Slovenia – and perhaps other Bismarckian systems – should seriously consider this small but powerful step.

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