Retirement Could Drive Future Growth in Germany

For Pascal Nörrenberg, Managing Director for German-speaking markets at the Israeli neobroker eToro, Germany is a particularly exciting market proposition right now. The reason is simple: the national government is fundamentally reforming how it incentivizes private retirement savings. The overhaul is set to make investing in securities – stocks and exchange-traded funds (ETFs) among them – considerably more attractive to millions of Germans. 

“Germany's private pension reform is an incentive for more people to save through capital-market products,” says Nörrenberg. “This will support growth in ETFs, funds, and other eligible investment products while expanding the overall market.”

From saving to investing

The new vehicle called Altersvorsorgedepot (retirement investment account) will come into effect in 2027 and is open nearly across the board to German taxpayers. Individuals who contribute EUR 1800 per year can receive the maximum government subsidy of EUR 540: the state adds 50 per cent to the first EUR 360 and 25 per cent to further contributions up to EUR 1,800. 

Many savers, however, are expected to invest considerably more – up to the annual ceiling of EUR 6,840 since returns are exempt from capital gains tax throughout the savings phase. The deposited funds can be allocated to stocks, government bonds, funds, and ETFs, and must remain in the account until the holder reaches at least 65 years of age.

The retirement investment account is designed to nudge more Germans towards the capital markets, helping them build a nest egg to supplement their statutory pension. The potential impact on the investment market is substantial: Deutsche Bank has calculated that around EUR 50bn per year could flow into the capital market if approximately half of those eligible for subsidies take up the new model.

The new system replaces the existing state-subsidized private pension system, the so-called Riester pension – a product hamstrung by its capital guarantee, which made it complex, expensive, and ultimately poor value.

Millions of potential new customers 

Securities account providers expect the new rules to act as a powerful growth catalyst, drawing in many Germans who have never before held a brokerage account or “played the stock market.” The change will stimulate additional business with existing customers too. 

eToro, for instance, plans to offer government-subsidized retirement savings plans to its customers, says Nörrenberg. “The new system creates a clear opportunity for neobrokers and fintechs, particularly as younger investors increasingly look to digital platforms for investing and long-term retirement planning.”

Other neobrokers – including Trade Republic, Scalable Capital, and Bitpanda – are also preparing to launch retirement investment accounts. They are anticipating up to ten million new account holders across Germany, and expect younger users in particular to manage their retirement savings via apps, as naturally as they manage their ETF savings plans today.

Asset managers stand to benefit alongside brokers. Demand for investment funds and ETFs is set to rise sharply, and international providers can draw on experience from markets where fund-based retirement savings are already well established. 

“This creates a clear competitive advantage for international asset managers who have already built cost-efficient, scalable fund or ETF solutions for retirement savings in other markets,” says Martin Werding, professor of economics at the University of Bochum.

A proven model – with a German twist

Germany's new retirement investment account joins a family of established international savings vehicles designed to channel private savings into the capital markets. The American Roth IRA and the British Stocks and Shares ISA follow a similar logic, offering savers significant tax advantages on long-term investments. What sets the Altersvorsorgedepot apart is an additional direct state subsidy of up to EUR 540 per year.

Traditionally Germany has been a nation of savers, which makes it an attractive location for internationally active brokers and asset managers. In 2024, German households saved around 20 per cent of their gross income – well above the European Union average of just under 15 per cent.

Yet a large share of those savings currently sits idle in low-interest bank deposits or insurance policies. The new retirement investment account may well be the nudge that finally gets it moving.