By Richard Johnstone | 19 December 2011
A senior local authority figure has warned ministers that plans for pension funds to invest in national infrastructure developments will not be approved ‘just to dig the government out of a hole’.
Councillor Ian Greenwood, chair of the Local Authority Pension Fund Forum, told Public Finance that he would not vote for the plan ‘unless it’s absolutely in the members’ interests’.
Chancellor George Osborne announced in the Autumn Statement that a Memorandum of Understanding had been signed with the National Association of Pension Funds. This agreement could provide up to £20bn of private investment in public infrastructure, he said.
‘We need to put to work the many billions of pounds that British people save, in British pension funds, and get those savings invested in British projects,’ he said. ‘You could call it British savings for British jobs.’
Osborne said the government had identified more than 500 infrastructure projects it wants to see built over the next decade and beyond, where this cash could be used.
Local government pension funds could be among the investors, with two – the Greater Manchester Pension Fund and the London Pensions Fund Authority – specifically highlighted by the government.
But Greenwood, whose body represents 54 public sector pension funds with combined assets of more than £100bn, said that as chair of the pension fund forum he would want to ensure investments would benefit members.
He said: ‘My view, very strongly, is that when you’re acting as a pension fund trustee, you should act on behalf of the beneficiaries of the scheme.
‘If someone puts together a prospectus that’s attractive, we will invest in it. We already invest in some infrastructure projects, but I would be strongly against if it was [down to] economic pressure. Then I don’t think we would do it.’
However, he added that funds could back good value proposals. He said he would want to know what was the investment, the time period and the risk. ‘I’m not going to vote for it unless it’s absolutely in the members’ interests, and not just digging the government out of a hole.’
LPFA chief executive Mike Taylor said that the agreement with the government allowed the fund to ‘see what’s on offer’.
He said that funds would need to know that the return from investment would be predictable before they could support the plans. This would require a lower level of risk exposure for project backers than current uses of private cash, such as the Private Finance Initiative.
‘If the government puts in guarantees to ensure a lower level [of risk] then pension funds might be willing to put more of their assets into it,’ he said.
A senior local authority figure has warned ministers that plans for pension funds to invest in national infrastructure developments will not be approved ‘just to dig the government out of a hole’.
Councillor Ian Greenwood, chair of the Local Authority Pension Fund Forum, told Public Finance that he would not vote for the plan ‘unless it’s absolutely in the members’ interests’. Chancellor George Osborne announced in the Autumn Statement that a Memorandum of Understanding had been signed with the National Association of Pension Funds. This agreement could provide up to £20bn of private investment in public infrastructure, he said.
‘We need to put to work the many billions of pounds that British people save, in British pension funds, and get those savings invested in British projects,’ he said. ‘You could call it British savings for British jobs.’
Osborne said the government had identified more than 500 infrastructure projects it wants to see built over the next decade and beyond, where this cash could be used.
Local government pension funds could be among the investors, with two – the Greater Manchester Pension Fund and the London Pensions Fund Authority – specifically highlighted by the government.
But Greenwood, whose body represents 54 public sector pension funds with combined assets of more than £100bn, said that as chair of the pension fund forum he would want to ensure investments would benefit members.
He said: ‘My view, very strongly, is that when you’re acting as a pension fund trustee, you should act on behalf of the beneficiaries of the scheme.
‘If someone puts together a prospectus that’s attractive, we will invest in it. We already invest in some infrastructure projects, but I would be strongly against if it was [down to] economic pressure. Then I don’t think we would do it.’
However, he added that funds could back good value proposals. He said he would want to know what was the investment, the time period and the risk. ‘I’m not going to vote for it unless it’s absolutely in the members’ interests, and not just digging the government out of a hole.’
LPFA chief executive Mike Taylor said that the agreement with the government allowed the fund to ‘see what’s on offer’.
He said that funds would need to know that the return from investment would be predictable before they could support the plans. This would require a lower level of risk exposure for project backers than current uses of private cash, such as the Private Finance Initiative.
‘If the government puts in guarantees to ensure a lower level [of risk] then pension funds might be willing to put more of their assets into it,’ he said.
