How does the fee cap change the product?
Germany is dropping the Riester system, which was built around a capital guarantee, in favour of a retirement account that can hold equities and index funds. The account, called Altersvorsorgedepot, opens on 1 January 2027 and can be offered by banks, insurers, fund managers, custodians and digital brokers. Fees on the standard account are capped at 1 per cent. More than a quarter of the roughly 225 billion euros parked in existing Riester products is expected to migrate, with total assets reaching 500 billion euros within a decade.[1]
The mechanism doing the work here is the fee cap, not the headline target. Below 1 per cent it is hard to run a guaranteed insurance wrapper profitably: a guarantee requires capital to be set aside, and that cost has to be booked somewhere. Once the cap binds, the drift of the standard product toward cheap index funds follows from arithmetic more than from preference. There is an alternative reading: distribution, rather than the cap, may decide the outcome. If the same banks and insurers stay behind the counter, the option a saver actually sees need not be the cheapest one the law permits.[1]
The size and timing of the flow
S&P Global Ratings projects additional annual inflows of 26 billion to 56 billion euros once an onboarding period of up to two years is behind the system. On top of that, more than 30 billion euros of public pension funding is being channelled into financial markets.[1]
A range that wide is a planning assumption rather than a forecast, and its two ends describe different worlds. The low end of the S&P Global Ratings range sits close to ordinary fund flow in European equities and leaves no distinguishable mark on price. The high end would make German households a visible buyer of European stock. The onboarding period of up to two years sets the timing as well: the system may open in 2027 without 2027 being the year the money arrives.[1]
Who will take the fee pool?
Those competing for early share include Deutsche Bank's fund arm DWS, JPMorgan Asset Management, Vanguard, BlackRock, Allianz and the digital broker Trade Republic. The list seats the insurer and the cheap fund provider at the same table.[1]
The number to watch is the migration rate, not the headline asset target. If the share of the roughly 225 billion euros in Riester products that actually moves stays below a quarter through the onboarding period, additional annual inflows should be expected near the low end of the S&P Global Ratings range. That rate is measurable once the system opens, and it will show whether the cap or the distribution channel decides the product.[1]