Germany’s funds association BVI has called on the German government to implement a reform of the country’s private pension market that would allow mutual funds to play a greater part in the sector.
A focus group was set up in 2023 by the German government to issue recommendations on reforms to old-age provision. One of these recommendations involved scrapping the compulsory guarantee and annuitisation measures imposed on private pension products, also known as Riester pensions within Germany.
The BVI argues that removing such measures would allow greater freedom of choice and returns, as well as the opportunity to invest more in equities. These reforms could be implemented “swiftly and with minimal effort”, states the BVI.
BVI proposes new fund vehicle to inject cash into EU projects
The association has also called on the government to ensure that state-managed funds are categorised in the right ‘pillar’ within Germany’s pensions market, arguing that these funds would have “an unbeatable competitive advantage” over other private funds in the market.
“The government has to act now,” said Thomas Richter, the BVI’s chief executive (pictured). “It would be fatal if another legislative period were to pass without reforming private old-age provision.”
Richter also criticised the politicians backing the current categorisation, stating that it was “incomprehensible” to support an idea that distorts competition in the private funds sector.
Assets under management in Germany rose by 9%, shows 2023 data
The BVI has also called for funds to play a greater role in infrastructure financing and issued support for the EU’s proposal to introduce a classification system for sustainable funds.
The BVI’s calls come in the wake of what the association called a “remarkable year” for German funds.
Assets under management for private and institutional investors rose by 9% in 2023, almost doubling over a ten-year period while new business reached €63 billion in funds and mandates.
