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Treasury minister courts UK schemes on infrastructure after PIP setback

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Danny Alexander, a senior Treasury minister in the UK coalition government, has called on pension funds to invest more in national infrastructure, offering his time to convince those unsure of the benefits.

Speaking at the National Association of Pension Funds (NAPF) Investment Conference, the Liberal Democrat and one of the most senior minor-party ministers said he was pleased with the progress made by the Pensions Infrastructure Platform (PIP).

The PIP, a joint venture between the NAPF and the Pension Protection Fund (PPF), recently secured its first £260m (€316m) seed investment from six UK pension funds.

It was set up, with vocal government support, to aid pension schemes access low risk and long-term UK infrastructure projects.

However, its launch investment was overshadowed by three pension funds, with combined assets of more than £65bn, abandoning the scheme, citing its cost and lack of return potential.

In response to the launch, Alexander called on NAPF members to consider the pooled arrangement.

“It goes without saying,” Alexander said, “that I would love to see more UK pension funds get involved [with the PIP] and invest in our country’s infrastructure.”

He added he would be pleased to set up meetings between interested parties and Infrastructure UK, a unit within his department dedicated to securing private investment in UK long-term infrastructure.

“This is a real opportunity for schemes to invest in exactly the sort of projects that will help the businesses of the UK, and the people of the UK, thrive into the future,” he said.

Alexander, a Scottish MP, also gave the crowd of delegates gathered in Edinburgh a raft of reasons he hoped Scotland would remain part of the UK.

He once again quashed suggestions the two countries could enter a sterling currency union should Scotland vote for independence in a referendum later this year.

Alexander said Scottish defined benefit (DB) scheme members could suffer if the country were to leave the UK.

The costs placed on DB schemes of setting up a new protection fund for those with failing sponsors would inevitably be passed onto members, he argued.

He also said the complexities involved in setting up financial regulation in an independent Scotland should be a concern for the UK pensions industry, suggesting it would inevitably diverge over time from the current set of rules.

“Of course a Scottish government, under independence, could decide to put in place policies that make the environmental favourable,” he conceded.

“But there are some fundamental aspects of being part of one large United Kingdom that really help strengthen this sector.

“No matter what policies are taken in Edinburgh, breaking up the United Kingdom would really undermine that success.”

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