Rafael Laguna de la Vera, president of the German Federal Agency for Breakthrough Innovation (SPRIN-D), which provides public funds for disruptive technologies, is in favour of deploying capital-funded pensions to support research and development projects, and growth in start-ups in Germany.
SPRIN-D’s president said in an interview with Börsen-Zeitung that some of the funds already planned for capital-funded pensions can be deployed in a so-called “innovation fund”. “Especially since it is well known that high returns can be achieved in the technology sector,” Laguna de la Vera added.
The state could protect against the risks of such investments on pension entitlements, and investors are rewarded with a higher return, he continued.
“If we had invested part of our retirement savings in equities 40 years ago, as done elsewhere, we would not have financing problems with statutory pensions today,” he said.
The Generational Capital equity fund reform, which turns the first pillar pension system into a partially capital-funded system with around €200bn in assets, has not been approved by Parliament after the collapse of the German government backed by the traffic-light coalition of Greens, the Social Democratic Party (SPD) and the liberal party (FDP).
Investing pension assets to back technological innovation would help prevent the migration of companies and innovators to financially strong countries, while at the same time stabilising pensions and paving the way for wealth creation in the future in Germany, SPRIN-D’s president added.
Germany is going through one of the worst economic crises in its history, hitting the country’s core industrial sectors such as automotive, and reigniting a public debate on how to fund innovative business models.
According to Laguna de la Vera, Germany lacks a vehicle for investors specifically to channel money to support technological innovations and start-ups that, as experience has shown, is highly profitable, he said.
“Of the €4trn lying around in capital [in Germany], part could be used as an investment for the future,” he said, pointing at the Tibi initiative launched in France with the backing of institutional investors to invest in tech companies. “That’s why France is much better positioned in this area than Germany,” he added.
In Germany, the government has launched the WIN-Initiative to invest in start-ups with pension scheme Bayerische Versorgungskammer (BVK), BlackRock, Allianz, and Munich Re among others, committing to invest €12bn.
SPRIN-D had €220m available last year, far from enough to turn technological innovation into profitable companies, he said.
Similarly, in the UK, the British Business Bank has been tasked by the government to establish the British Growth Partnership, with the first investment expected by the second half of 2025. It will create a new vehicle to crowd-in UK pension fund and other institutional investment into venture capital funds and innovative businesses, supported by a cornerstone government investment.
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