Fragmented subsidies for occupational and private pensions and the consequences of extenting available asset classes for corporate finance in Austria

Subsidies for occupational and private pension plans in Austria differ according to the vehicle used by firms or private households. The diversity is historically grown but it impairs individual decision making and renders the whole subsidy system inefficient. A documentation of the variety in subsidies forms the first part of this study. At the same time institutional investors face different requirements with respect to their investment strategy. While investing for old age pensions requires a long-term investment horizon, most institutions concentrate on fixed income bonds. As a consequence, investment in equity and risky assets remains small. This study explores the potential for corporate finance by institutional investors with long-term investment horizons.