Germany’s historic pension overhaul could boost annual inflows into the system’s three pillars by €90 billion ($105 billion), according to Apollo Global Management Inc. European Economic & Policy Strategist Huw van Steenis. The reform might direct 2% of salaries into long-term savings, generating roughly €30 billion a year for the statutory pillar, Van Steenis said. Additional flows into private pensions and occupational schemes could triple the total once implemented.

The German government adopted a pension system revamp to encourage savers to invest more in capital markets. The goal is to support a system strained by an ageing population that has relied on low-yielding, ultra-safe assets. Germany has the least-funded pension system among major advanced economies, with funded assets at just 7% of GDP versus 149% in Sweden and 185% in Canada.

Demographics and the need for domestic capital are driving change, Van Steenis said. He noted that Germany is building a recurring institutional flow of capital that will deepen German capital markets.