More shares needed in pension schemes

Against the backdrop of the current pension package of the Federal Minister of Labour and Social Affairs, Bärbel Bas, Deutsches Aktieninstitut is urgently calling for reforms in old-age provision. We call on the German government to fundamentally address the problems and utilise the earnings potential of equities in all pillars of pension provision for the benefit of the people. 

"Safeguarding future generations in old-age provision is one of the most important tasks of the German government. Equities, equity funds and ETFs in all three pillars of old-age provision are the best chance for a pension that is fair to all generations," emphasises Henriette Peucker, Chief Executive and Member of the Board of Deutsches Aktieninstitut.

In 1962, six contributors financed one pension; since 2000, two contributors have borne this burden. This ratio will continue to deteriorate. In addition, the financing of pensions has had to be supported by ever-increasing amounts from the federal budget for decades. Last year, 116 billion euros, or 25 per cent of the federal budget, was spent on stabilising the statutory pension. At the same time, Germany is one of the few countries that does not make sufficient use of the capital market to finance old-age provision for its citizens. 

On 1 July 2025, the current pension value will be raised from 39.32 euros to 40.79 euros. Pensioners will then receive 3.74 per cent more pension. The stop line, which determines the pension amount of an average pensioner in relation to the average income, is also to be maintained at 48 per cent until 2031. This is the result of a draft bill by Bärbel Bas, Federal Minister of Labour and Social Affairs.

Our studies show how things can be done better in other countries. For example, our Study on retirement savings accounts: What Germany can learn from other countries when it comes to private pension plans, which we produced together with Deutsche WertpapierService Bank AG.

"The early-start pension planned by the German government is a first step in the right direction. We also welcome the reform of the Riester pension planned by the coalition partners and assume that the goal of a new pension product is linked to the introduction of a retirement savings account. Despite these measures, we still lag well behind the international standard in Germany," emphasises Peucker. 

The example of Sweden shows that old-age provision and the tax-subsidised investment savings account there are the levers for more volume in the capital market. This is proven by our current study With the capital market to the nation of the future. Sweden's success factors together with the Boerse Stuttgart Group. "The immense tasks of the future cannot be tackled with state special funds alone. A functioning capital market is also essential for this," continues Peucker. This requires further reforms.