Can pension funds help finance infrastructure investment?

The Industry Forum recently addressed the important question of whether pension funds can help finance the essential renewal of UK infrastructure. Lauren Edwards MP, who has Bank of England and HM Treasury experience, led a wide-ranging discussion with professionals from the insurance, finance, construction, energy, telecoms, legal and advisory sectors. Matt Connell, Public Affairs Director at the Chartered Insurance Institute welcomed members and guests to their offices in the iconic Walkie Talkie building, in the City of London. There was recognition that getting the right formula could unlock significant investment but that obstacles need to be overcome. Government action to provide incentives for investment rather than rules mandating investment, would be preferred. To minimise pensioner risks it would be essential to avoid some of the mistakes previously made in setting up unduly expensive public-private partnerships. This would require good dealmaking and contract management skills to balance the strong commercial instincts of contractors. Pension funds not familiar with buying or owning infrastructure assets, could perhaps work together with specialist infrastructure investors to provide matched funds in the way that some development banks operate. This is clearly an area of a big potential to help the government’s growth agenda and a subject to which the Industry Forum will return.