NAPF, PPF welcome £40bn infrastructure guarantee
UK - Proposals by the UK government to underwrite key infrastructure projects worth £40bn (€51bn) have been warmly received by the pensions industry, with the National Association of Pension Funds saying the guarantee should strengthen the growing interest from schemes in the asset class.
The UK Guarantees scheme, recently announced by chancellor of the exchequer George Osborne, would support any large developments that could get underway within the next 12 months, as long as they were deemed "nationally significant" and stemmed from the Treasury's recent National Infrastructure Plan.
The plan, published last year, outlined 500 potential infrastructure projects including rail, road and broadband developments, with Osborne also announcing a £6bn temporary lending facility that would aid 30 public private partnerships in the next year.
In a joint statement, the NAPF and Pension Protection Fund (PPF) - currently developing an infrastructure fund it hopes to launch by the beginning of next year - welcomed the government's guarantees.
PPF chief executive Alan Rubenstein said it should grant investors the confidence to provide the financial support such projects needed.
"The announcement should also provide further encouragement to pension fund investors to support the Pensions Investment Platform (PIP), which both our organisations are working hard to establish," he said.
Joanne Segars, chief executive at the NAPF, concurred.
"The promise of a government backstop will help give investors more confidence when it comes to funding big infrastructure projects," she said.
The issue of construction risk has repeatedly been raised by industry members, with Rubenstein previously saying that pension funds were poorly placed to understand it, and that the PIP would therefore be structured to avoid it.
Despite the launch proposed for January next year, little has so far been confirmed about the proposed platform, which came about after the Treasury, PPF and NAPF signed a memorandum of understanding.
Only Strathclyde, the UK's largest local authority scheme, has so far publicly committed "in principle" to providing £100m, coming in addition to seed capital provided by the UK lifeboat scheme.