Council pension funds ‘should invest in infrastructure’
Author: Mark Smulian, LGC |
Local government pension funds should plough money into infrastructure investment both to boost their own returns and to support essential projects, a think-tank has said.
Localis argued in its Credit Where Credit’s Due report that pension funds could invest on their own and also help to capitalise a 30bn National Infrastructure Bank to promote local economic growth.
Launching the report, communities and local government secretary Eric Pickles said: ?Pushing power and resources away from Whitehall is creating the conditions that will lead to a sustained and balanced economic recovery across the country.?
The report said the NIB could be financed from a combination of money created from the Bank of England’s quantitative easing and public and private pension funds.
It argued that pension funds of all kinds had seen poor returns from the equity markets in recent years and could do better by diverting a modest part of their investment into infrastructure projects.
This had already happened abroad, with the California Public Employees’ Retirement System ? America’s largest public fund – having raised its infrastructure investment from 1 to 3% of its portfolio.
Pension funds investment could also encourage private capital into infrastructure projects, notably in waste, where the reluctance of banks to lend had hampered schemes.
?With 14bn lost in the crash then, local government pensions schemes are turning their attention to the more stable, if less spectacular, wins offered by domestic infrastructure,? it said.
The report also called for a new round of enterprise zones and for each local enterprise partnership areas.