UK pension investment platform reaches £1bn

The UK’s Pensions Infrastructure Platform has announced that two more pensions have signed on the dotted line, meaning it now has £1bn of firepower to invest in the asset class. The London Pension Fund Authority and Lloyds TSB are the latest members.

The UK’s Pensions Infrastructure Platform (PIP) is now halfway to a target size of £2 billion (€2.3 billion; $3.1 billion) with ten funds having joined the platform, accounting for a combined £1 billion. PIP is designed to meet perceived UK pension demand for investment in inflation-linked, long-term investments.  

The London Pension Fund Authority and pension schemes managed by banking group Lloyds TSB are the latest funds to sign up for the scheme, which requests member contributions of £100 million each.

Organisations already signed up include British Airways Pension Scheme, BAE Systems Pension Funds, BT Pension Scheme, Pension Protection Fund, The Railways Pension Scheme, Strathclyde Pension Fund and West Midlands Pension Fund.

A statement from the National Association of Pension Funds (NAPF) said PIP “remains on track to launch in the first half of this year”. It said a corporate administration structure is now in place and that PWC had been hired to help with the selection of a manager for the platform.

The contributions to the scheme are currently defined as ‘soft commitments’ until investment criteria, asset preferences and fee structures are agreed and Financial Services Authority (FSA) authorisation sought.

Billed as a platform “being developed for pension funds by pension funds”, PIP is expected to invest in core infrastructure, in projects free of construction risk and on an availability basis to avoid excessive GDP risk. It will target low leverage, low fees, inflation linkage and long-term cash returns of Retail Price Index plus 2 percent to 5 percent.   

“Infrastructure, when available in appropriate structures, should be an attractive asset class to UK pension schemes and the PIP should be an important step in making infrastructure more accessible,” said Eric Stobart, chairman of the investment and funding committee of the Lloyds TSB Group Pension Schemes in the NAPF statement.