Pension provision in Germany and France: Recommendations for flexible, high-yield and comprehensive occupational pension schemes

Demographic change is posing increasing challenges for pension systems in which contributions from the current working population directly finance the retirement benefits of older generations. Many countries are therefore supplementing the traditional pay-as-you-go system with funded elements involving equities. While the pay-as-you-go system of the first pillar and private pension provision in the third pillar are often at the centre of political debate, the second pillar of occupational pension provision receives less attention. Yet with greater use of equities and thus higher potential returns, it could become a key pillar. Deutsches Aktieninstitut has examined models of occupational pension schemes and reform efforts in France and Germany and derived recommendations for action to secure pension income.