At the same time, around 126 billion euros in public capital sit in the pension reserves and pension funds of the federal government and the German states – held mostly in low-yielding government bonds and covered bonds. Illiquid assets such as infrastructure play virtually no role, even as comparable funds like KENFO, VBL, or international pension funds achieve noticeably higher returns with far more diversified portfolios.

This study shows how both problems can be solved together: through a reform of public pension funds' investment strategies, following the example of VBL and KENFO, and a new public-investor pool under the umbrella of the Deutschlandfonds. Within it, KfW would pool the commitments of public funds and invest them in numerous individual minority stakes in electricity and heating distribution grids.

The result: around 6 billion euros in existing public capital would flow into grid expansion, while the expected return of these special funds would rise by roughly 1.5 percentage points per year – without tying up any new budget funds.

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