This post was written by Ros Jackson. As part of our Perspectives on Infrastructure series, Burges Salmon spoke to Daniel Woolf, Senior Policy Advisor at the CBI, about the challenges facing infrastructure investment.
Infrastructure, as an industry, is operating in/planning for the much longer term than many other investments. This could present a stable/predictable investment for pension funds, and may match the modest returns, and long term outlook sought by pension funds (for example the LGPS (the LGPS is one of the largest DB schemes in the world, and the largest In England and Wales (per report 2019)).
According to a Legal & General report earlier this year approximately a fifth of the UK’s infrastructure funding gap over the next decade could be plugged by pension funds.
There may therefore be clear mutual benefits for pension funds and the infrastructure industry where pension funds invest in infrastructure projects.
In the UK, the appetite from the private sector to invest in infrastructure has only grown with the advent of COVID-19, while the government’s need for private capital to deliver its objectives is also clear.