The German government, policymakers, and occupational pension stakeholders are seeking to direct a larger share of pension savings into global equity markets to support long-term economic growth.

Michael Schrodi, Parliamentary State Secretary at the Federal Ministry of Finance, stated that the government’s goal is to reach as broad an audience as possible to encourage capital market participation and to build “future-proof” occupational and private pensions. The ongoing second-pillar reform (occupational pensions) is laying the foundation for wider adoption of defined contribution (DC) plans and higher-yield corporate pensions among low-income workers. Meanwhile, a public hearing in the Bundestag Finance Committee is examining reforms to third-pillar private pensions ahead of final party negotiations.

At last week’s Zukunftsmarkt Altersvorsorge event in Berlin, Schrodi highlighted plans to leverage equity market returns through retirement savings accounts investing in globally diversified ETFs. He emphasized: “We want to encourage people without capital market knowledge to finalize pension contracts,” adding that lower costs and transparency are critical to building trust.

Martin Moryson, Global Head of Economics at DWS, pointed to Germany’s low equity participation, noting that only 14.1 million people hold equity funds, ETFs, or shares, according to the Deutsches Aktieninstitut. “This must change; capital markets bring more [economic] growth,” he said.

Focus on Auto-Enrolment and Mandatory Pensions

Policymakers and the pension industry agree that mandatory elements in second- and third-pillar pensions are increasingly important as demographic pressures mount on public pensions. Carsten Linnemann, CDU member of parliament, described the tendency to avoid capital markets for pension funding as the country’s biggest policy shortcoming. He has revived the concept of an Aktienrente (equity pension), inspired by Sweden’s premium pension model, which was abandoned after the previous coalition collapsed. Discussions continue on a mandatory, opt-out, capital-funded pension similar to Sweden’s model.

Lars Golatka, board member of R+V Versicherung’s pension funds, highlighted that mandatory pensions with opt-out options have proven effective abroad. Hansjörg Müllerleile, co-managing director of MetallRente, the occupational scheme of IG Metall and Gesamtmetall, acknowledged that voluntary occupational pensions have limited reach, and additional measures are needed to cover more workers.

Annika Klose, SPD MP, also recognized the limitations of voluntary systems, calling mandatory second-pillar pensions jointly financed by employers and employees “a good idea.” Armin Grau, Green Party MP, emphasized strong employer-financed occupational pensions as a means to secure adequate retirement incomes, while the Greens also support mandatory private pensions with opt-out provisions.

By contrast, the far-right Alternative for Germany (AfD) opposes mandatory second- and third-pillar pensions due to concerns over higher contributions. AfD MP Ulrike Schielke-Ziesing noted that while the party supports ETF investments for second-pillar pensions, it remains cautious about social partner models offering DC schemes.