German Pension Reform - Funding the Future

Research evidence excerpt

German Pension Reform - Funding the Future

Gigi Sparling - Specialist Sales - European Financials AC (44-20) 7134-0355 Europe Specialist Sales J P M O R G A Nghislaine.sparling@jpmorgan.com

J.P. Morgan Securities plc 24 July 2026

Gigi Sparling

+44 207 134 0355

ghislaine.sparling@jpmorgan.com

Amidst the noise of Q2 reporting season, momentum-driven market swings and ongoing geopolitical headlines, our

insurance team has taken a step back from the noise to assess a big structural theme in the sector: German pension

reform. Their conclusion is - while the reforms are likely to attract new entrants and intensify competition - they should

also provide a meaningful tailwind for incumbent insurers. Pension reform is set to remain a key theme across insurance,

diversified financials and banks, with a number of companies already announcing German expansion plans in part to

capitalise on the new private pension framework. While the reforms remain modest relative to pension systems elsewhere,

particularly in terms of contribution flexibility and tax incentives, they represent a significant step forward for the

German Savings Market.

The key product categories are as follows:

• Accounts without a guarantee – permitting up to 100% equity exposure and the highest return potential.

• Guarantee products– offering an optional 80% or 100% contribution guarantee.

• A mandatory low-cost standard default product – a simple two-fund solution (one global equity fund plus one bond fund)

with automatic lifecycle de-risking and a cost cap of 1.0% effective annual cost. Acquisition costs must be spread over the full

term, rather than front-loaded in fees.

Overall investment flexibility has been markedly improved from the old system encouraging higher returns. This will mean that