A proposal to create a pension fund for German civil servants could produce rich pickings for fund managers. Spiralling pension costs in Germany have forced its central government to suggest reforms to its federal states, which employ 1.8 million civil servants. It is proposing to set up a funded scheme to cover their benefit costs.

This is the first time a German government has proposed carving a funded pension scheme out of the state sector. Other governments such as France, Ireland and Norway have gone out of their way to create state reserve funds.