Leading pension experts are cautioning against fundamental flaws in the rollout of the planned German “Sweden Pension” system. According to Jörg Rocholl, a capital market expert and member of the Pension Commission, hastily implemented solutions could rapidly erode public trust. The German government intends to introduce an additional, capital-backed component to the statutory pension system, modeled after the Scandinavian approach, with phased implementation starting in 2028.
A central point of contention is determining where the invested capital should be managed. Tabea Bucher-Koenen, a professoress in economics and a fellow member of the government’s Pension Commission, stressed that for the Sweden Pension to be successful, the funds must be permanently insulated from political interference. She emphasized that the capital investment must prioritize the improvement of old-age provisions above all else, explicitly warning that this goal must not be mixed with other political objectives. For weeks, the ruling coalition has been debating the use of these pension billions to finance German startups and renew dilapidated infrastructure; Chancellor Friedrich Merz (CDU) has referenced this as a growth financing opportunity.
Currently, two main institutions are candidates for managing the funds generated by the “Sweden Pension.” The SPD parliamentary group has advocated for the Deutsche Bundesbank to take on the management role. Frauke Heiligenstadt, the Social Democrats’ finance policy speaker in parliament, told Spiegel that they welcome the idea of the Bundesbank managing the capital pension. An alternative candidate is the Kenfo, a fund currently managing billions in reserves dedicated to the final disposal of German nuclear waste. Anja Mikus, the Kenfo CEO, confirmed that the fund is both capable and willing to manage the capital pension.
However, experts currently view neither institution as perfectly suited for the task. Critiques of the Bundesbank include the relatively poor returns it has achieved while managing state reserves; for instance, estimates from economic advisors placed the return on the nursing care provision fund at only two percent annually. Conversely, a disadvantage of the Kenfo is its relatively low public recognition.
Rocholl remarked that “after the disaster of Riester, this shot simply has to be perfect.” He proposed a third solution: developing both the Kenfo and the Bundesbank into a new, independent national asset manager.
