Pension funds and PPF sign landmark agreement with government to help boost investment in UK infrastructure
27 November 2011
The National Association of Pension Funds (NAPF) and the Pension Protection Fund (PPF) have signed a Memorandum of Understanding with the Government to facilitate the development of a new pension infrastructure platform to help pension funds invest more in infrastructure.
Chancellor George Osborne announced this morning (Sunday) that an agreement had been reached with UK pension funds to help develop a new investment platform.
The NAPF represents 1,200 pension funds and its members hold around £800bn in assets, while the PPF protects 12 million pension scheme members and currently has an investment portfolio of over £6bn.
A new investment platform could allow UK pension funds to pool their resources and allow them to invest in key UK infrastructure assets and projects in a new way.
Structured correctly, infrastructure assets can provide the necessary investment profile that pension funds require, and pension funds can be an important source of private investment. However, the current investment model makes it difficult for them to invest efficiently in infrastructure.
Joanne Segars, Chief Executive of the NAPF, said:
"We're excited by the Government's commitment to try to make it easier for pension funds to back major infrastructural projects, and we look forward to working on the details with them.
"This could be a real win-win. The UK desperately needs to update its infrastructure, and pension funds are looking for inflation-linked, long-term investments.
"Pension funds hold over a trillion pounds in assets, but only around 2% of that is invested in infrastructure. There's the potential for that to be much higher.
"Infrastructure is a good fit with the needs of pension funds because projects like ports and power stations can offer a reliable return over a long timeframe.
"But at the moment many pension funds struggle with the mechanics of investing in infrastructure. They need a simpler financial vehicle that helps them to get on board with bricks and mortar."
Alan Rubenstein, CEO of the PPF said:
"We see infrastructure as a core component of the PPF's investment strategy. We therefore welcome today's announcement, and the opportunity to work with the Government and the NAPF to explore ways to remove barriers and facilitate opportunities for efficient investment in infrastructure projects."
The National Infrastructure Plan states that the UK needs over £200bn of new infrastructure investment over the next five years - the vast majority of which will need to be provided by the private sector.
The Memorandum of Understanding sets out the framework of how the Government will work with the NAPF and PPF to help facilitate and increase their investment in infrastructure. The Government is targeting an additional £15-20bn of new investment in UK infrastructure.
Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683, [email protected]
Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]
Paul Reynolds, Director of Corporate Affairs, PPF, 020 8633 4968 or 07961 957487, [email protected]