Germany’s Deutsches Aktieninstitut (DAI) has urged policymakers to expand the use of equities across all three pillars of Germany's pension system, arguing that further reforms are needed to ensure retirement provision remains sustainable in the long term.

The comments were made ahead of a summit on social reforms at the Federal Chancellery, where pension reform is expected to be among the topics under discussion.

DAI chief executive and board member, Henriette Peucker, said Germany faces a significant challenge in ensuring pension provision remains fit for the future amid demographic pressures.

“Ensuring that pension provision is fit for the future is one of the key challenges of this parliamentary term,” Peucker stated.

“Experience from other countries shows that greater use of equities is essential to securing people’s livelihoods in old age. In Germany, too, we need equities across all three pillars to create a more robust pension system.”

The intervention follows the recent approval by the German Bundestag of reforms to private pension provision, centred on the introduction of a new pension savings account.

The reforms were welcomed by industry stakeholders as a significant step towards increasing long-term retirement savings and improving access to capital market investments.

However, Peucker argued that further changes are now needed to modernise both occupational and statutory pension provision.

As part of its proposals, the DAI has called for the newly introduced pension savings account to be opened up to occupational pension provision.

According to Peucker, this would provide a straightforward route to simplifying occupational pensions while improving portability for savers moving between employers.

“That would be a straightforward way to simplify occupational pension provision and improve portability,” she added.

“We hope that today’s summit will also provide impetus for the use of shares in occupational and statutory pension provision.”

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