Funds are the driver of old-age provision

• Assets under Management for old-age provision rise to over EUR 2 trillion
• Reform of private pensions: higher potential returns and more flexibility

In Germany, the fund industry is the largest manager of capital for old-age provision. According to a survey of the BVI, members managed EUR 2,020 billion for old-age provision purposes by mid-2025. This is 44 per cent of total assets managed by the fund industry, which amount to almost EUR 5,000 billion. Within the last three years, assets for old-age provision purposes grew by just under EUR 300 billion.

‘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. Now the government aims to make state-subsidised private old-age provision more attractive to achieve wider dissemination. To this end, the Federal Ministry of Finance has proposed a retirement savings account – without any obligation for contribution guarantees or lifelong annuitisation. ’This paradigm shift is necessary so that savers can invest with higher returns. The decades-long mantra that only annuity-based pension insurance counts as old-age provision no longer holds. People have different needs in retirement. Those who want a lifetime annuity should receive it. However, those who seek flexibility, higher return opportunities and more self-determination should be allowed to opt for a fund (withdrawal?) payout plan’, says Richter.

According to the BVI survey, the assets managed by fund companies for old-age provision are primarily backed by occupational pension schemes amounting to EUR 590 billion, endowment life insurance policies with EUR 530 billion, and professional pension schemes for medical doctors, pharmacists, and lawyers with EUR 520 billion. Occupational pension schemes include above all direct commitments (EUR 280 billion) and pension funds (EUR 180 billion). 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) manage EUR 190 billion.