Mental barriers to be overcome by politicians, and latent mistrust among the population, or at best reticence – this is how Heiner Herkenhoff views the relationship between Germans and the capital markets. But without the capital markets it will be impossible for most people to have a sufficient income in old age, the CEO of the Association of German Banks (Bankenverband) said at the recent Börsen-Zeitung Retail Banking Day. Thus Germans must learn to put aside their reservations, politicians must take some courageous steps, and confidence in capital markets-based private pension provision must be built up.

Herkenhoff argued that the German government's plans to preserve the pension level in real terms are not enough to ensure standards of living in old age. On the contrary, private pension provision would be further dampened as pension contributions would rise sharply, leaving younger people with even fewer financial resources to be put aside for private pension provision. In his opinion, state subsidies that go beyond the existing Riester pension, and also include securities savings plans, for example, could provide a remedy. „That would be a major step forward – it would be exactly what we need," he said.

Younger people in particular need the potential returns offered by the capital markets for their pension provision. „The banks are ready to help their customers with this," said Herkenhoff. "Basically, everyone involved is waiting for the government to give the go-ahead for long-term private asset accumulation.“

In order to change the investment behaviour of broad sections of the population, he urged politicians to get beyond mental barriers, and make more extensive use of the capital markets for retirement provision. „In order to build confidence in private pension provision, it would certainly be helpful if the opportunities were talked about much more in the political arena.," he suggested.

Anyone who has invested in DAX stocks over 20 years has received an average annual return of 8.6%, he said, citing figures from the Deutsches Aktieninstitut. And while not denying the risks involved, these risks can be dealt with. One in three German citizens could conceivably take higher risks in order to realise higher returns.

Financial education is of essential importance. This is the only way to overcome fears and make sensible judgements. „Basically, all we have to do now is convince people that they are also doing something good for themselves when they invest their money in the capital markets,“ Herkenhoff said.