Two council schemes join pension fund investment agency
By Richard Johnstone | 18 October 2012
Two local authority pension funds are among the six founding investors in a Treasury-backed agency set up to boost investment in capital projects across the UK.
Both the Strathclyde Pension Fund and West Midlands Pension Fund have agreed to join the Pensions Infrastructure Platform, which aims to have around £2bn to invest when it launches next year. The platform, announced by Chancellor George Osborne in last year’s Autumn Statement
, now has a ‘critical mass’ of backers, the National Association of Pension Funds said today.
Other founding members include the pension schemes for BAE Systems and BT, the Railways Pension Scheme for former British Rail employees and the statutory Pension Protection Fund.
These investors are expected to provide around half the £2bn of investment capital, with a number of other funds also considering joining up.
Today’s announcement said the platform would invest in ‘core infrastructure’ and in projects free of construction risk, such as those that already have planning permission. Detailed investment criteria and asset preferences are still to be agreed, although the fund would aim for ‘inflation-linked, long-term investments’.
NAPF chief executive Joanne Segars said: ‘This is excellent progress and marks an important milestone in the PIP’s development. There is a lot of work still to do, but we are confident of making further progress and launching next year.
‘This investment vehicle is unique. It has been designed by the pensions industry with the pension industry’s needs squarely in mind, and it will be aligned with funds’ long term interests.’
Although ministers signed a memorandum of understanding with the sector last year, the PIP is being developed by pension funds independent of government. But it will keep its ‘constructive relationship’ with the Treasury, the NAPF said.
Last month, Chief Secretary to the Treasury Danny Alexander said the platform would be launched in January
to help ‘UK pension funds to invest directly in UK infrastructure assets and projects in a new and more efficient way’.
Today he welcomed the progress on developing the platform, which forms part of the government’s effort to secure up to £20bn of private finance for UK infrastructure over the next decade.
‘The NAPF and PPF have made excellent progress on delivering a unique vehicle for pension funds to invest in our infrastructure, and the uptake shows industry can see the compatibility between the two,’ he said.
‘Infrastructure networks form the backbone of a modern economy and are a key driver of growth. The PIP is another innovative scheme to unlock investment for major projects. I look forward to watching it develop further in the next few months and congratulate the NAPF and PPF on the strong work they have done to complete this first stage in record time.’