Germany: Fund industry manages some EUR 1,800 billion for retirement provision
The fund industry is the largest manager of capital for retirement provision in Germany. ‘Although citizens so far often provide for their pensions through life insurances or occupational pension, a large part of this social capital is eventually managed in funds,’ says Thomas Richter, CEO of the German Investment Funds Association BVI. According to a survey of the BVI, members managed EUR 1,770 billion for retirement provision purposes by mid-2021. This is 44 per cent of the total assets managed by the fund industry of more than EUR 4,000 billion. For comparison, the share was 40 per cent at mid-2017. In the meantime, assets for retirement provision purposes grew by EUR 600 billion.
Endowment life insurances with EUR 610 billion are the main pillar of the assets managed by the fund companies for retirement provision purposes. Occupational pension schemes account for EUR 520 billion; these include above all direct commitments (EUR 270 billion) and pension funds (EUR 190 billion). Fund companies manage EUR 400 billion for professional pension schemes for medical doctors, pharmacists, and lawyers, for example. Conventional and state-subsidised fund savings plans (for example ‘Riester’ and capital-forming savings schemes) account for EUR 130 billion. Fund companies manage EUR 110 billion for supplementary pensions for federal, state, and municipal employees as well as for the churches. The evaluation shows that funds are the driver of retirement provision. In this context, the BVI welcomes the fact that the Federal Government wants to allow more opportunities for returns in occupational and private pension provision for future pensioners and to introduce mandatory pension provision with freedom of choice for future self-employed persons.