Germany: Fund industry is the largest manager of capital for old-age provision
- Over EUR 1,900 billion for old-age provision purposes
- Reform of private pensions: Germany must finally catch up internationally
In Germany, the fund industry is the larg-est manager of capital for old-age provision. ‘Although people often have different access via endowment life insurances or occupational pension, finally a large part of this capital is managed in funds’, says Thomas Richter, CEO of the German Investment Funds Association BVI. According to a survey of the BVI, members managed EUR 1,910 billion for old-age provision purposes by mid-2024. This is 44 per cent of the AuM of the fund industry of over EUR 4,300 billion. For comparison, the share was 40 per cent at mid-2017. In the meantime, assets for old-age provision purposes grew by more than EUR 700 bil-lion. ‘This shows that funds are the driver of old-age provision’, says Richter.
Endowment life insurances with EUR 530 billion and occupational pen-sion schemes with EUR 590 billion are the main pillars of the AuM of the fund companies for old-age provision purposes. Occupational pension schemes include above all direct commitments (EUR 270 billion) and pension funds (EUR 170 billion). Fund companies manage EUR 450 bil-lion for professional pension schemes for medical doctors, pharmacists, and lawyers, for example. Supplementary pensions for federal, state, and municipal employees as well as for the churches account for EUR 180 billion. Conventional and state-subsidised fund savings plans (‘Riester’ and capital-forming savings schemes) account for EUR 150 billion.
The reform of private pensions will also play a central role in the next legislative period. Richter: ‘The decades-old mantra that only guarantees and an annuity count as old-age provision no longer applies. The current reform proposal provides freedom of choice for the first time and offers savers higher return opportunities and more flexibility. We are advocating for the new government to continue on this path, allowing Germany to finally catch up with international role models such as the USA, Sweden and France in terms of old-age provision.’
