The low affinity of Germans for investing in shares has long been known. As a result, the rapid rise of the Dax over the past 10 years, during which the index more than doubled, has largely gone unnoticed by most savers.

In 2024, the number of Germans investing in stock funds, ETFs, or directly in individual stocks slightly decreased to 12.1 million. This represents just 17.2% of the population aged 14 and above, according to the association Deutsches Aktieninstitut. The low number of Germans benefiting from rising stock prices and dividends highlights a lack of awareness regarding the significant challenges posed by demographic shifts, with a growing elderly population, particularly the Baby Boomers, and a shrinking youth demographic. It suggests a belief that the state pension system will resolve everything, or that the Riester pension is truly effective.

Henriette Peucker, the Managing Director at the Deutsches Aktieninstitut, aptly summarises the situation, stating that the stagnating number of shareholders „demonstrates the failure of lawmakers over the past decades.“ When it comes to private retirement provision via the capital markets, the governments under Gerhard Schröder, Angela Merkel, and Olaf Scholz have made almost no progress.

To understand how efficient retirement provision should be structured, it is enough to look at other countries. In the United States, private share ownership is standard, which not only serves retirement needs, but also strengthens the capital markets. Another example is the Swedish model, with its state pension fund AP7, which has achieved substantial profits through stock investments.

In order to strengthen the capital markets and address the gap in retirement provision, the new government should address this issue as quickly as possible. The Aktieninstitut’s call for the introduction of a government-supported private pension account, where stocks make up a substantial portion, is long overdue. Over the long term, dividend-paying stocks are typically far more profitable than fixed-income investments.

CDU Chancellor candidate and former Blackrock executive Friedrich Merz has called for private retirement provision through stock investing during the election campaign. This is at least an encouraging signal for the upcoming legislative period.