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DeAM sees German pension market growth

GERMANY – Deutsche Asset Management has predicted that the German market for occupational and private pensions will expand to around €5trn in 2030 – or five times the current volume.

Breaking down the €5trn figure, DeAM said occupational pension assets should rise to €1.9trn in 2030 from €381bn currently. Private pension assets should also reach €3.17trn by then from €650bn now.

DeAM’s pension market estimates, unveiled at a Frankfurt news conference, are less ambitious than previous ones. Last week, the consulting firm A.T. Kearney said German occupational pension assets alone would rise to some €4trn by 2030. This would exceed private assets, which would hit €3trn by then.

But like the other forecasters, DeAM said the growth of the second- and third-pillar would be driven by the government’s promotion of those pensions to compensate for the crumbling state benefit.

According to DeAM, Germany’s state pension will account for just 50% of retirement provision 25 years from now compared with 80% now.

Meanwhile, DWS, DeAM’s retail fund sister, reported robust growth with third-pillar pensions, saying that to date, it had sold 2.3m fund-linked private pensions and life insurance policies. The sales have enabled it to accumulate €5.6bn in assets.

Axel Benkner, chief executive of DWS, said that partly due to the growing popularity of the Riester pension, DWS expected to take in at least €1bn in new assets annually for the business segment.

Asked by IPE if DWS’ success with the Riester pension meant that the simplified retirement account concept from German fund industry association BVI was irrelevant, Benkner said he didn’t agree.

“What we do and what the BVI does on the political level are separate issues. Having said that, the BVI’s retirement account has a lot of promise, especially where occupational pensions are concerned,” Benker told reporters at the news conference.

BVI said earlier this week that it would undertake a new effort to get lawmakers in Berlin to adopt its retirement account, which is modelled after America’s 401k plan and individual retirement accounts.

The BVI argues that the charm of its proposal is that small- and midsize enterprises (SMEs) – many of whom do not offer corporate pensions – can set up the account at virtually no cost.

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