Until 2025, the Ontario Teachers’ Pension Plan (OTPP) held significant stakes in major European airports, including Copenhagen, Bristol, Birmingham, and London City. A privately run fund, it generates $8.5bn in annual returns for Ontario teachers at no cost to the taxpayer.
Meanwhile, German Beamtenpensionen, which cover not just teachers but also judges, police, and tax officials across the public sector, represent an unfunded liability that is trending toward €1.4 trillion and are paid directly from the state budget. Although national capital market rules allow for equivalent pension schemes, the German government reiterated its commitment to the pay-as-you-go (PAYGO) system in its 2025 pension reform.
A unified capital market should allow pension systems to replicate the “Maple Model” at a European scale. But will harmonized rules and centralized supervision suffice to entice European savers to invest in more productive assets? Or do we need a simultaneous rethinking of investment culture?
The gold standard for capital markets and investment culture remains the United States. Its stock exchanges are fueled not only by institutional investors but also by retail participants. This economic participation is second nature to a country that uses its exchanges as benchmarks for economic health.
Yet the American model carries risks that European policymakers are right to weigh. The shift from defined-benefit pensions to 401(k)s transferred market risk from institutions to individuals, leaving households exposed to volatility that they often lack the financial sophistication to navigate. Market downturns fall disproportionately on those least able to recover. Europe should aspire to American levels of capital market participation, but not to American levels of retirement insecurity.
Meanwhile, European households increased their holdings of financial wealth from 36.7% to 41.1% in deposits between 2015 and 2022 (EFAMA). This savings culture is inherent to the continent’s largest economies. Germany’s reliance on its Sparkassen represents both an institutional and cultural obstacle to CMU developments, compounded by the country’s debt-related trauma and distrust of equity markets. France’s Livret A and Italy’s postal savings network represent two more politically untouchable, culturally embedded savings vehicles.
Yet dismissing these preferences as mere backwardness ignores their internal logic. European savers witnessed American households lose trillions in retirement wealth during the 2008 financial crisis and the 2022 correction. The German saver who keeps funds in a Sparbuch earning minimal interest is not irrational; they are expressing a revealed preference for stability over returns, underwritten by implicit state guarantees.
Commissioner Albuquerque has stated that the Savings and Investment Union provides another vehicle for citizens to invest their savings, emphasizing that increasing the EU investor base for strategic priorities would occur only “should retail investors choose to allocate their investments accordingly.” The EU does not want to impose investment requirements on its citizens, but rather to provide alternative options for savers. However, if the EU wants to emulate the United States, it will realize that it has not only created investment vehicles but also engineered participation through policy.
Cultural shifts will be required not only at the retail level. At the institutional level, the German government coalition displayed stubborn short-sightedness regarding the very initiative it promotes at the European level.
Germany’s 2025 pension reform was sold as a step toward capital market integration. In practice, it tells a different story. The reform introduces a modest public equity fund (Generationenkapital) but caps its scope, limits equity exposure, and maintains PAYGO dominance. Rather than signalling a genuine embrace of capital-market logic, the reform reads as a political compromise that gestures toward modernization without disturbing the underlying structure.
German policymakers, like many European counterparts, treat the CMU as a regulatory project: harmonize rules, centralize supervision, and capital will flow. But a capital market union is not simply a legal framework. It is a behavioural and fiscal proposition. It requires governments to accept that savers must be nudged, that tax incentives must be deployed, and that legacy systems must eventually yield to market logic. Berlin wants the architecture of a capital market union without accepting the market culture it demands.
The technical barriers to a unified capital market are well-documented. Twenty-seven national regulators operate with limited coordination, while ESMA lacks direct supervisory authority over most market participants. Insolvency law remains fragmented across jurisdictions. Withholding tax complexity persists despite progress on the FASTER directive. Post-trade infrastructure remains nationally siloed.
These obstacles are tangible, measurable, and solvable with sufficient political will. But they are not the binding constraint. A perfectly harmonized regulatory framework will not compel a German saver to abandon their Sparbuch, nor will centralized supervision convince an Italian household to move from BTPs to pan-European equities. The technical layer is necessary but insufficient. Without addressing the cultural and behavioural foundations of European savings, the CMU risks becoming elegant infrastructure with no users.
If the European Commission agreed on a Savings and Investment Union framework tomorrow, capital would not flow from unproductive deposits into critical infrastructure without a fundamental cultural shift. But let us be clear-eyed about what “cultural shift” demands. If European savings behaviour is genuinely shaped by postwar institutional design, intergenerational memory, and decades of policy reinforcement, then financial literacy programs and behavioural nudges are insufficient instruments. They treat a structural condition with superficial remedies.
The initiative requires deliberate restructuring of tax codes to penalize unproductive deposits and integration of capital market education into secondary school curricula. So far, EU officials have refused to pursue even auto-enrolment policies, suggesting they have not yet grasped the scale of the undertaking.
This is a multi-decade effort to reshape how European citizens relate to risk, return, and retirement. The Ontario Teachers’ Pension Plan did not acquire stakes in Copenhagen, Bristol, Birmingham, and London City because Canadian capital markets are superior. It did so because European pension systems failed to mobilize domestic savings for domestic assets. The infrastructure was ours; the returns went to Ontario. Until European policymakers accept the true scope of this undertaking, that will not change.