Portfolio structure of the German households and the role of insurance and pension entitlements

This paper examines the wealth structure of German households from 1975 to 2014 with special reference to the asset class insurance and pension entitlements. Therefore we use a unique dataset of Deutsche Bundesbank and apply a Financial Almost Ideal Demand System (FAIDS). We find a nearly proportional reaction of the insurance share to changes in the total wealth level, but no significant impact of the insurance return to the asset class. Therefore we conclude that security and not return optimization is the main demand motive for the asset class insurance and pension entitlements. Finally, we find a positive relation between the share of the elderly in Germany and the insurance share in the portfolio.