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Insurers may win out in German pensions boom

GERMANY – The new German pensions market could exceed the current estimate of €53bn if the public sector joins the rush and tax reforms decided by the Supreme Court are implemented, says Commerzbank Securities (ComSec) in a special report on German pensions.

The trade unions are taking a direct role in negotiating the new retirement and pension provision products between providers and companies, says the research, and have already made sure that group schemes have been included in the pensions reform.

The research also suggests that pension fund inflows will be seen mostly among insurance companies and not banks, since banks have difficulty offering pension products in Germany because of product criteria such as capital guarantees and annuity payouts. The report says that the banks appear to be focusing their attention on more traditional savings products and that they don’t like the idea of receiving regular small payments.

ComSec predicts that pools of large insurers will be selected as pension product providers across whole industry sectors, and suggests that insurance companies already have the administrative set-up to deal with the pensions contributions process.

There will also be a race for market share, given the potential of the pensions market, says the ComSec report, despite expected cannibalisation of new life insurance business.
The premium income of the German life insurance market last year was €61bn.

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