I think a few different policies will help lend themselves to larger population growth.
-As mcfly said USSR policy to forcefully transfer volksdeutsch and some western Ukrainians to Germany. A funny addition would be a forced transfer of Jews, a way to shock the Germans. A more liberal western German population would seem possible if, for whatever reason, the Wallies did not employ as many reparations. Perhaps a scarier Berlin Airlift and all of those forced population transfer lead to the West doing a Marshal Plan 2.0 in Germany, rebuilding even more infrastructure and even industry (returning machine equipment that was ransacked and returned to France.)
-A very liberal immigration policy to man those factories from the ATL miracle on the rhine and in the ATL Marshal Plan. Maybe we can have increased German involvement in Korea and Vietnam with a government policy of encouraging the marriage of soldiers to local women there (perhaps due to a lot of immigration to West Germany being men from Turkey, Greece, and etc working the factories and needing wives in Germany themselves.)
-Somehow, we also need to keep abortion illegal in Germany. This was a Nazi policy until 1944 so its not that Germany never had this. Even now IOTL, Germany's abortion laws are among
the most conservative on earth. So, we would have to make the laws more draconian, like in Romania, which is not as much of a stretch as some would think. We still lost something around
3 million lives from abortion in the last 3 decades in Germany. So, if we are going to wank Germany's population over decades these 3 million lives, if we keep a positive birth rate, has a cascading effect.
-Maintaining of very liberal birth laws (loans, hand-outs, etcetera) dependent upon positive birth rates. These are generally not all of that effective but better than nothing.
-Germany has about 78% of its population in urban area. Urbanization is culturally for whatever reason the chief mitigating factor against high birth rates. Perhaps a cold war policy that intentionally decentralizes German populations and industry (which is not inconsistent with German culture, as a large reason the Wallies could not bomb German industry into the ground was because it was so decentralized in small workshops making pieces here or there). Maybe more domestic investment into military weaponry with a policy of decentralization can do it. Its not impossible, Germany had pretty large rural and suburban populations into modern times, we'd just have to artificially keep it as such. Also more money wasted on domestic agriculture would also help. Perhaps if Germany was less socialist and totally forgiven reparations would allow Germany to invest in some of these things.
-USSR gets different leadership after Kurschev that intentionally allows more liberalization, my POD being no Prague Spring. A liberalization of economies, but an allowance of immigration from Russia. IOTL, East Germany's economy was way better elsewhere in the USSR. Furthermore, West Germany's GDP IOTL exceeded the whole of the USSR. So, if we have intentional economic liberalization early on by the late 60s and early 70s, based on an incremental policy of liberalizing Warsaw Pact members, we might not only save the USSR, but East Germany is going to get a ton of immigration themselves.
-Unified Germany adopts chain immigration laws based upon ATL West German precedent. This will bring in a lot more people. If Germany in ATL Marshal Plan gets a lot more universities, they might be able to bring in tons on student visas from Asia and Latin America, and eventually those immigrants sponsor their families, who sponsor their families etc.
-Lastly, screw the USA somehow. That;s another thread, but IOTL Germany is the second largest immigration destination on earth after the USA. Just make Germany somewhere more attractive to go vis a vis somewhere else.
Yes, all of the above is audacious, but 120 million in Germany is also audacious!
This can also be done with some sort of draconian soviet measure that, for whatever ATL reasons, merges Germany with Czeckoslovakia, POland, or whatever. Then, on paper, all of their populations are considered one. COme unification, it drastically increases total "German" population. An ATL harsher cold war, with a lower population, but in that the EU becomes a dictatorship and gets subverted by Germany is another weird way to fulfill the OP.