UK transport infrastructure could be in line for billions of pounds of extra investment from town hall pension pots, under plans unveiled by communities secretary Eric Pickles this week.
The DCLG has proposed allowing the Local Government Pension Scheme (LGPS) funds – which hold combined assets worth £148bn – to double the amount it can invest in local infrastructure schemes, raising a potential £22bn more for transport, housing or regeneration projects.
At present, a 15% cap applies on how much the 89 LGPS funds can invest in limited partnerships – the asset vehicle often used for major property, private equity and infrastructure projects.
However, under the DCLG's plans, which are out to consultation until the 18 December, this could be doubled to 30% – equivalent to an extra £22bn.
Mr Pickles said: 'This is potentially a huge development and investment opportunity we simply cannot afford to ignore that also allows us to maintain long-term value for money for the taxpayer.'
In response, Sir Steve Bullock, chair of the Local Government Association's workforce board, stressed that fund managers had a moral duty to maximise returns for pension beneficiaries, so 'an increased limit or new investment class doesn't automatically mean more investment in infrastructure will follow'.
'Councils and their partners in private industry and central government have to make sure that infrastructure projects represent a good investment with competitive returns. It is also important that investments are prudent, transparent and not open to political interference,' he said.
Joanne Segars, chief executive of the National Association of Pension Funds, welcomed the consultation, saying the current regulations 'are no longer fit for purpose and need urgent reform'.
