GERMANY - Awareness of pension funds in Germany is not “pronounced” among average investors, a report from the German investment fund industry association, BVI, reveals.

It found that most of those who think about pensions prefer life insurance

The survey by the BVI, which includes mutual funds, institutional funds and asset management companies, suggests that while the theme of pension provision “dominates” the German financial press, the average investor still prefers short-term investments.

The most popular criteria in choosing an investment are maximum interest yields with the highest possible margin of security. Only 16% named investment funds as an option - and just 40% said they had done enough for their old age provisions.

Twenty-seven per cent have done nothing and 33% of the participants has taken some steps but did not feel it is enough.

“It is noteworthy that of those who have not yet done anything for their pension provisions, 25% have not even thought about it. This is a sign that the theme of pensions is not common at all,” said the BVI report, presented by the BVI’s head Stefan Seip.

“As always life insurance dominates clearly,” the report states.

“While the provision of pensions is a theme dominant in the financial world and the financial press, the knowledge around this theme is not so pronounced as we had imagined and even hoped for,” said the report.

“Financial grounds” are the reason why 43% have abstained from private pension plans. “The lack of financial freedom of movement” caused by “ a load of taxes” is a central theme, the BVI said.

Investors should be clearly explained the “enormous” long-term advantages of a highly diversified portfolio, a task to which the BVI will in the future still more strongly dedicate itself.

“We can hope that with the incumbent introduction of the pension taxation bill, Alterseinkunftgesetz, the noticeable tax relief will be used to set up of capital-resources for pension provisions,” the association also said.

Through the new Alterseinkunftgesetz bill, annual contributions paid by employers to supplementary or top-up pensions would be made gradually tax-free until 2025, when they are expected to be tax-exempt.

The first step would be to make contributions 60% cheaper for employers as immediate tax-exemption would have cost the government about €20bn.

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