Suggestions for stabilising the German pension system

Association for Financial Markets in Europe Stabilising the German pension system – recommendations for the state, occupational and private pension pillars February 2025 The challenge of stabilising the pension system Summary of recommendations  Strengthen the state pension by investing to generate long-term returns (for example, through the Generationenkapital fund)  Consult on introducing auto enrolment schemes at national level and contribute to the assessment of products at European level  Reform the private pension system to provide citizens with attractive products (for example, the proposed Altersvorsorgedepot) This note is organised as follows:  Context  Pension systems and international comparison  What are the options for Germany?  Recommendations for the next parliament Context An aging population is placing a strain on Germany's statutory pay-as-you-go pension system. The contributions paid by workers are not suf�icient to pay the pensions, and the government has to �inance the de�icit every year – in 2023 the de�icit was around €100 billion – a gap that has to be bridged by the federal budget. State pensions in Germany constitute more than three quarters (76%) of the income of pensioners, and occupational pensions constitute only 8%. Nearly 60% of household �inancial assets in Germany are in deposits or life insurance – the share of typical capital market instruments (bonds, pension funds, investment funds or equities)...