West Midlands Local Govt Pension Fund in £250m economic regeneration plan
“Funds have taken a number of such investment opportunities and this initiative is not only to establish the depth and breadth of the current market, but to challenge asset managers to bring opportunities forward on sufficient scale to match the investment allocations pension funds are prepared to commit.”
There are over 100 local government pension schemes in the UK with collective funds of £140 billion. They are governed by legislation restricting the kind of asset classes they can invest in, but that restriction could be about to be lifted in an attempt to kick-start economic growth.
Local Government Minister Brandon Lewis has announced consultation into reforming the rules surrounding council pension funds and a decision is expected later in the year.
The initiative by West Midlands, Greater Manchester, West Yorkshire, South Yorkshire and Merseyside pension schemes follows an influential report last year by the which pointed out that pension funds have the potential to help supply long-term, stable growth capital at a time when the financially squeezed public sector is looking for new sources of private sector investment.
The report proposed that local authority pension funds should be able to use their substantial resources in ways that derive wider economic benefit.
The Smith Institute report added: “A combination of restrictions on raising capital finance and public-sector cuts (£6.68 billion by 2015) gives little doubt that these conditions have contributed to a decline in the overall quality of infrastructure, leaving the UK in a challenging position compared with many of its peer economies.
“Local authorities continue to remain under intense pressure to finance existing services and initiatives, let alone invest in infrastructure to address the issues that continue to affect their long-term competitiveness – such as worsening concentrations of deprivation and worklessness.”
