UK gov’t working to rectify ‘really bizarre’ infrastructure ownership structures

Pensions Minister Guy Opperman wants British pension funds - rather than Australian ones - to be investing in British infrastructure, but concedes current structures makes this difficult.

The UK government is working “very, very hard” to increase British pension fund’s ownership of local infrastructure, according to Pensions Minister Guy Opperman.

Opperman said he is working with the industry on an ongoing basis to support more investment from defined contribution pension schemes investing in infrastructure and housing, in a speech at the UK’s Pensions and Lifetime Savings Association conference last week.

“There are definitely things holding back DC organisations from investing in certain things. It’s just not happening as we would like,” he told the gathering of over 200 public and private pension funds. “I find it really bizarre Crossrail and King’s Cross are run by Australian superfunds, not by British organisations. People will say ‘they are bigger’ and ‘it’s different’ and I accept that. At the same stage, with auto-enrolment and consolidation, we are going to see a situation, if not now, then in the future when this is going to be radically different.”

Source: Chris McAndrew

The King’s Cross real estate development programme is owned by AustralianSuper and Hermes Investment Management on behalf of the BT Pension Scheme. Crossrail, the £15.4 billion ($20 billion; €17.4 billion) London railway line under development, is a wholly-owned subsidiary of government body Transport for London.

“My job is to make sure we are match fit and ready to grasp those opportunities for the future,” Opperman added. “We are going to have very substantial organisations with very large funds and I want them to be looking at the UK. If you want to engage the individual in the type of savings they have, then investing in UK infrastructure or climate change or social capital is something that will definitely make a difference. That’s something I’m working on very, very hard.”

The UK’s local authority schemes are continuing the programme initiated under the previous government to pool assets and gain greater capability to invest in infrastructure. However, DC pension funds are still looking for ways to find access to the asset class.