Pension reform is gaining momentum!

Increased appeal, reduced costs and flexibility

Greater flexibility, customisable options and attractive potential returns are the three key pillars of the new reform. The aim is to replace the Riester pension with new, flexible, higher-yielding and more cost-effective pension products. To facilitate this, tax relief will be made available for pension accounts without a guaranteed return.

The reform thus opens up state-subsidised pension provision to capital market-oriented solutions by permitting, in addition to traditional products, fund- and ETF-based pension models in particular. A standardised pension account is established as the core product, supplemented by new models such as the ‘Early Start Pension’, which enables people to start saving for retirement earlier. High flexibility, individual customisation and potential returns are the focus of the new private pension scheme. For investors with a greater need for security, it will still be possible to take out policies with guaranteed products.

At the same time, cost-effective standard products are to be created to provide better guidance for investment decisions; these must be available from every provider of pension products. Furthermore, citizens will in future have greater flexibility during the payout phase of private pension provision, enabling the offering of fixed-term pensions alongside lifetime pensions.

New business models based on the reform

The reform shifts the system significantly towards the capital market and drives the development of new revenue streams. As the regulatory framework is finalised, opportunities are emerging for new pension product lines, particularly among large financial institutions such as banks, fund companies, brokers and asset managers. State-subsidised pension contributions can thus flow directly into funds and ETFs, creating millions of new savings plans and enabling the reallocation of existing Riester funds. The planned pension reform therefore opens up a large, long-term growth area for financial institutions, as it enables stable inflows of funds and recurring revenue. At the same time, a scalable mass market for standardised, low-cost pension products is emerging, which is being tapped through digital distribution models and new partnerships and, due to the removal of guarantees, offers additional scope for return-oriented investment strategies. In return, financial service providers must offer cost-effective, digital and standardised solutions in order to realise the growth and earnings opportunities.

Obligations before opportunities

The reform opens up significant opportunities for financial institutions, but at the same time, due to its complexity, it entails a considerable need for technical and organisational adaptation. It requires financial institutions to have already implemented extensive operational and technical preparations before the reform comes into effect.

End-to-end pension solutions: Our advisory and implementation package, from strategy to reporting

We provide comprehensive support to financial institutions in implementing pension reforms with an end-to-end offering that combines specialist advice with technical implementation. Our experts in the securities and custody sector provide advice on capital market-oriented pension solutions, subsidy and product structures, and regulatory requirements. In doing so, we combine securities and capital markets expertise (including through WEPEX, a specialist consultancy for banks, stock exchanges, asset managers and wealth managers) with modern technology for microservice architectures, APIs, market data and ESG data platforms, as well as digital asset use cases.

Building on this, marketing strategies are developed and conversion rates are specifically optimised throughout the customer journey. Our UX teams design user-centred UX/UI solutions for web and mobile platforms and integrate marketing campaigns and communication channels, ensuring that complex pension planning topics are communicated clearly and that end customers are guided effectively towards completing transactions online.

At the same time, existing online brokerage and custody account solutions are expanded to include pension planning functionalities and seamlessly integrated into the core systems. The offering is rounded off by the specialist and technical implementation of regulatory reporting and disclosure requirements. The necessary reporting channels, allowance processes and reporting solutions are designed, implemented and connected to the relevant authorities. This creates a comprehensive, scalable solution – from advisory services through UX and marketing to the implemented reporting system – as the foundation for an efficient and sustainable implementation of the pension reform.