Important security note: Warning of attempted fraud in the name of DWS
We have detected that fraudulent individuals are misusing the "DWS" trademark and the names of DWS employees on the internet and social media. These fraudsters are operating fake websites, Facebook pages, WhatsApp groups and Mobile Apps. Please be aware that DWS does not have any Facebook Ambassador profiles or WhatsApp chats. If you receive any unexpected calls, messages, or emails claiming to be from DWS, exercise caution and do not make any payments or disclose personal information. We encourage you to report any suspicious activity to info@dws.com, including any relevant documents and the original fraudulent email. Additionally, if you believe you have been a victim of fraud, please notify your local authorities and take steps to protect yourself.
10 Themes - #5: Could Europe's demographics raise interest in stocks?
20/10/2025
Europe’s pay-as-you-go pension system should be supplemented by a funded system. This could also help foster public financial literacy and support Europe's economy.
The world's population is likely to continue growing for a few more years, but with only around two dozen countries driving that. The rest of the world is shrinking, including Europe and Germany in particular. One problem associated with population decline is the resulting strain on pension systems.
The birth rate is only one of several factors influencing the viability of pension systems. The pay-as-you-go system suffers from the fact that each contributor is having to support more and more pensioners. This could be relieved in various ways – other than by a rather unlikely turnaround in the birth rate. The rate of employment or the retirement age could be increased. Pensions could be reduced. Higher immigration could be permitted. Or economic productivity could be raised. It is likely that all four of these levers will have to be pulled. In addition, however, a pension system funded by investment savings is, in our view, urgently required.
The challenges for a complete switch from a pay-as-you-go to a funded system are well known – and should be taken seriously. A switch of this kind can only be effected gradually. Ultimately, in an extreme case, one generation might have to support two systems at the same time: current pensioners via the pay-as-you-go system and their own pensions via the funded system. But the fact that the status quo is not an option[1]
Well-known problem: more pensioners per worker
Sources: United Nations, DWS Investment GmbH as of 10/14/25
This information is subject to change at any time, based upon economic, market and other considerations and should not be construed as a recommendation. Past performance is not indicative of future returns. Forecasts are based on assumptions, estimates, opinions and hypothetical models that may prove to be incorrect. Source: DWS Investment GmbH.
We suggest that government incentives for private retirement savings through stocks should be expanded significantly. In addition to enhancing pension security, we believe this could have other positive side effects:
- Greater public engagement in issues relating to financial returns and risk.
- The potential for higher returns in the long term compared to the current savings options, though with greater volatility and risk.
- A greater understanding of growth-promoting structural reforms, which may involve short-term losses and only boost income in the medium term because these longer-term benefits are appreciated on the stock market and therefore become visible to pension savers.
- The change would also be in line with the European Savings and Investment Union, which is currently becoming more concrete. Ultimately, a switch towards stock-based pension savings could also help young companies outside the banking system to raise capital, which is in line with a recommendation in the Draghi report.[2]
Martin Moryson, Head of Economics at DWS, says: "Germans save more than enough, but mostly not in the best way. Almost 40%[3]
In Germany anyone who had invested the same amount in the Dax every year for 40 years since 1983 would have achieved an average return on all contributions of over 8%.[4]
CIO Special_Theme 5 - Demographics
Miscellaneous