The federal government wants to stabilize state pensions with a fund called “generational capital.” Kenfo boss Anja Mikus has now explained which stocks and other investments the money could flow into.
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The planned pension support fund “Generational Capital” is expected to invest heavily in stocks and non-listed investments such as private equity. This is suggested by statements by Kenfo boss Anja Mikus. “As a rule of thumb, you could go for a share quota of 80 percent,” said Mikus on Wednesday during a press conference. The “Fund for the Financing of Nuclear Waste Disposal” (Kenfo) will also manage generational capital in the future.
The Berlin traffic light government plans to initially invest a double-digit billion amount of debt on the capital markets each year to support the pension insurance system. Payments to the pension insurance system are then to be made from the mid-2030s. In 2025, 12.4 billion euros are to be paid in. The corresponding draft law has not yet been passed in the Bundestag. The payment is made when the “Generational Capital” fund takes out a loan from the Federal Finance Agency, which manages the federal government’s debt and can in turn borrow on the capital market.
According to Mikus, a “generation capital” fund can invest at higher risk than Kenfo, which regularly distributes money to finance the search for a final storage facility for nuclear waste in Germany. “The generation capital does not have to make any payments for a long time, which results in a different risk profile,” said Mikus.
In terms of its composition, the “generation capital” fund could be based on the equity allocation of Kenfo, which invests in around 3,800 stocks from all over the world. The pension fund could therefore invest the money for the pension in the same stocks that Kenfo invests in. “The remaining 20 percent could be invested in private equity and infrastructure, the bond share would then be significantly lower than in Kenfo,” said Mikus.
Microsoft and TSMC in the lead
At the end of last year, Microsoft, TSMC, ProLogis and Apple were the largest individual stocks in Kenfo’s portfolio. Vonovia, Siemens, SAP, Deutsche Telekom and Munich Re were the top performers in Germany.
Kenfo manages assets of around 24 billion euros and is expected to pay for the final storage of nuclear waste generated in Germany by the end of the century. Because it makes regular payments for this purpose, it is heavily invested in bonds in order to receive regular coupon payments. At the end of last year, 37 percent of its assets were invested in government and corporate bonds (including high-yield bonds).
Last year, Kenfo achieved a record return of 11.1 percent and reported a profit of 360 million euros. Around 637 million euros were paid out last year for the interim storage of nuclear waste and the search for a final storage facility. Mikus was cautiously optimistic about this year: In the first half of the year, a return of almost five percent was already achieved.
Kenfo was founded in 2017 as the first German state fund. The operators of the 25 German nuclear power plants had released themselves from their obligation to temporarily and permanently store radioactive waste by paying a good 24 billion euros. Kenfo, which is organized as a foundation, invests the money in the capital markets.
Source: Stern
