Two of the largest local authority pension funds, Strathclyde Pension fund and West Midlands Pension Fund, are among the founding investors to support the Pensions Infrastructure Platform (PIP) which has been set up to facilitate investment in infrastructure.
The other founding investors in the PIP include the BAE Systems Pension Funds, BT Pension Scheme, the Pension Protection Fund and the Railways Pension Scheme. It is believed that the PIP is seeking around 10 initial investors who will contribute £1 billion between them. Another £1 billion will be raised by borrowing to give a £2 billion fund for investing in infrastructure projects, with no construction risk, with the aim of generating long-term returns of inflation plus between 2% and 5%. The PIP is aiming to keep fees to around 50 basis points a year.
BT Pension Fund head of strategy, Frank Naylor, commented on the PIP: “It provides an excellent opportunity to invest in core infrastructure alongside like-minded UK pension schemes. We look forward to a widening of the opportunities for UK pension schemes to invest in infrastructure assets which are structured to provide the right characteristics.” The PIP has been formed by the efforts of the National Association of Pension Funds (NAPF) and the Pension Protection Fund (PPF). NAPF chief executive, Joanne Segars, said: “This investment vehicle is unique. It has been designed by the pensions industry with the pension industry’s needs squarely in mind and it will be aligned with funds’ long term interests”.
Work will now start on the detailed development of the PIP and the next step is the selection of a manager to run the platform. Investment criteria, asset preferences and fee structures are still to be agreed.