Two of the largest British pension schemes have joined the public Pension Infrastructure ProgrammeMonday 18 February 2013 19.06
Two major pension schemes have joined Britain's first multi-billion-pound infrastructure fund, giving a boost to the government's efforts to tap pension savings for projects such as roads and power plants that might help fuel growth.
The London Pensions Fund Authority (LPFA) and Lloyds TSB have joined The Pension Infrastructure Platform (PIP).
This brings the number of signatories to ten and total backing for the fund so far to £1 billion, PIP said.
PIP is an investment fund backed by major corporate and local pension funds, such as the BT, BAE Systems and British Airways pension funds, with a £2 billion target size.
Umbrella body the National Association of Pension Funds is backing the project, which will be launched in the first half of 2013, to inject pension fund money into tired British infrastructure to support an ailing economy.
"The government has estimated funding needs of between 40 billion pounds and £50 billion in infrastructure annually over the next decade," Edmund Truell, chairman of the LPFA said in a statement.
Pension funds are diversifying their investments in the hunt for higher returns amid low yields on government bonds and rising life expectancy.
PIP will invest in brownfield projects - assets that are already built and earning income - or projects where the government will take on some of the construction risk with the aim of achieving returns of 2-5% above inflation.