Investing.com --Germany's private pension assets could double to about €500 billion ($577 billion) over the next decade as a major reform directs more retirement savings into capital markets, Bloomberg reported on Saturday.
Asset managers including Deutsche Bank's (NYSE:DB) DWS Group (ETR:DWS), JPMorgan Asset Management and Vanguard are preparing products for January 1, 2027, when the new system takes effect.
The reform will replace Germany's Riester pension system, which has traditionally prioritised capital guarantees and conservative insurance products. Savers will instead gain access to subsidised brokerage accounts holding investments such as index-tracking funds and private credit.
The standard account will cap fees at 1%, which is expected to favour low-cost exchange-traded funds. Investors will also be able to pay more for products including European long-term investment funds, which provide retail access to private equity, private credit and infrastructure.
S&P Global Ratings estimates the changes could generate €26 billion to €56 billion in additional annual inflows into German private pensions following an onboarding period of up to two years.
Competition is increasing among banks, insurers, fund managers and digital brokers seeking an early share of the market. BlackRock (NYSE:BLK) is working with banks and neo-brokers to offer ETFs, active funds and private-market products.
Allianz (ETR:ALV), Germany's largest insurer, plans to provide products both with and without capital guarantees. Trade Republic and other digital platforms are also preparing offerings aimed at younger and wealthier investors.
Consultancies Sirius Campus and Aeiforia estimate that more than a quarter of the roughly €225 billion held in existing Riester products could migrate to the new system.
The overhaul comes as Germany faces growing pressure from an ageing population. Within a decade, the country is expected to have only two working-age people for every person of retirement age.
Germany's statutory pension already consumes about one-quarter of the federal budget. Separate reforms could channel more than €30 billion of public pension funding into financial markets and raise participation in employer-backed retirement plans.
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