Germany’s private pension assets could double to approximately €500 billion ($577 billion) over the next decade as a major reform channels more retirement savings into capital markets, Bloomberg reported on Saturday.
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Asset managers, including DWS Group (ETR:DWS)—part of Deutsche Bank (NYSE:DB)—JPMorgan Asset Management, and Vanguard, are preparing products for the January 1, 2027, launch of the new system.
The reform will replace Germany’s “Riester” pension system, which traditionally prioritized capital guarantees and conservative insurance products. Instead, savers will gain access to subsidized brokerage accounts holding investments such as index funds and private credit.
Standard accounts will cap fees at 1%, a move expected to boost the growth of low-cost ETFs. Investors will also have the option to pay more for products such as European Long-Term Investment Funds (ELTIFs), which offer retail investors access to direct investments, private credit, and infrastructure.
S&P Global Ratings estimates that the changes could generate between €26 billion and €56 billion in additional annual inflows into German private pension funds following an adjustment period of up to two years.
Competition is intensifying among banks, insurers, fund managers, and digital brokers vying for early market share. BlackRock (NYSE:BLK) is collaborating with banks and neobrokers to offer ETFs, active funds, and private market products.
Allianz (ETR:ALV), Germany’s largest insurer, plans to offer products both with and without capital guarantees. Trade Republic and other digital platforms are also preparing offerings aimed at younger and more affluent investors. Consulting firms Sirius Campus and Aeiforia estimate that more than a quarter of the approximately €225 billion held in existing Riester products could shift to the new system.
The reform is taking place against a backdrop of mounting pressure on Germany from an aging population. Within a decade, there are expected to be only two working-age individuals for every person of retirement age in the country.
Germany’s statutory pension system already consumes about a quarter of the federal budget. Specific reforms could channel over €30 billion in public pension funds into financial markets and boost participation in employer-sponsored pension plans.
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