KENFO, Germany’s nuclear waste management fund, will invest funds from the capital-funded component of a reformed first pillar scheme also in infrastructure and private equity, the fund’s chief executive officer Anja Mikus said in an interview with Manager Magazine.
Mikus added that KENFO’s managers will invest the assets of the generational capital, as the reform has been dubbed, in real assets, looking at the long-term, with the goal of achieving the highest possible returns.
KENFO has switched from investing in bonds that are in a partially capital-funded first pillar scheme because the generational capital fund is not responsible for pension pay-outs, instead shifting to bonds “as a safe haven” that the CEO believes is possible during a period of market downturns.
The share of liquidity in the generational capital fund will also be low in the absence of pay-outs, she added.
KENFO will help manage the assets in the generational capital (Generationenkapital) fund at least in the start-up phase, via its in-house expertise.
According to reports, the German government will increase the amount of funds to reform the first pillar to €200bn until 2035.
Using KENFO’s asset management know-how to invest pension money to build the generational capital would lead to “synergies and minimise costs through economies of scale”, the CEO added.
According to the government’s plans, the capital-funded part of the first pillar scheme will be managed as a permanent fund by an independent foundation under public law.
KENFO is also looking to boost investment in illiquid assets to between 2.5% and 4% this year, so that it holds up to 30% of its total assets in alternatives in the medium term.
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