Apollo Global Management's European Economic & Policy Strategist Huw van Steenis estimates that once Germany's pension changes are fully in place, they could add around €90 billion per year to the country's three-pillar retirement system. Translated to dollars, that comes to about $105 billion in fresh annual flows.
Van Steenis links the core uplift to a move that would allocate 2% of wages to long-term savings, which he says "points to roughly €30 billion a year" for the statutory public pillar. He adds that further contributions to private pensions and workplace schemes could lift the total to roughly three times that statutory amount once the full package of reforms is implemented.
Earlier this year, the government approved a pension revamp designed to get savers putting more of their retirement money into capital markets. The aim is to shore up a system stretched by an aging population and a long preference for ultra-safe, very low-yield assets. As Van Steenis puts it, "demographics and the desire for scaled pools of domestic capital are now forcing change," and "Germany is starting to build a recurring institutional flow of capital that will deepen German capital markets."
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Van Steenis writes that Germany has "the least-funded pension system of any major advanced economy." In Germany, funded pension assets are 7% of GDP, compared with Sweden's 149% and Canada's 185%. The figures are for the latest year available and cover pension providers as well as public pension reserve funds; the comparison, partly based on OECD data, also omits some countries. For everyday savers, the shift matters because policy is nudging more retirement money toward capital markets, with a longer time horizon doing more of the heavy lifting.
