Federal Minister for Economic Affairs Katherina Reiche (CDU) is advocating for a stronger utilization of capital-backed pension schemes to invest in startups, directly addressing growing concerns about pension security. While acknowledging that many German pension funds are currently operating at a loss, Reiche contrasted this situation with other European pension funds that achieve yields between eight and ten percent. She explained that these better-performing funds allocate a small fraction-around two percent-of their capital to startups and the capital market.
According to Reiche, those institutions that invest even a “very small part” of their portfolio in new companies and growth ventures end up in a better financial position, securing their retirement far more effectively than current practices in Germany allow.
Reiche stressed that a similar mechanism is needed domestically. She pointed out that in the United States, a substantial portion of the profits generated from these high-growth investments reaches retirees directly. By implementing a comparable system, Germany could prevent its companies from migrating to the American stock market. The ultimate objective, she stated, is to ensure that startups can “remain, be founded, and grow here,” while simultaneously establishing them as a “significant pillar” of the nation’s retirement provisions.
