The National Association of Pension Funds (NAPF) welcomed changes to the Local Government Pension Fund (LGPS) investment regulations aimed at making it easier for local authority pension funds to invest in infrastructure.
The Government has increased the cap placed on the amount that local authority pension funds can invest through limited partnerships from 15% to 30%. Limited partnerships are a legal structure often used for major property, private equity and infrastructure projects.
The NAPF has been lobbying for this change on behalf of its local authority members. The change will take effect from 1 April 2013.
A number of LGPS funds already invest around 15% of their portfolios in limited partnerships through property and private equity investments. This has meant that they have little capacity to invest in new infrastructure initiatives.
Darren Philp, Policy Director, NAPF, said:
“Many local authority pension funds have told us that they are prevented from making the best decision on investments because of out dated rules which place limits on the amount that can be invested in infrastructure. So we are pleased that the Government has listened and has made this change.
“Lifting this limit will remove one barrier, but there are wider issues that need to be addressed. The Government needs to undertake a comprehensive review of the local authority pension fund investment regulations to ensure that funds can act in the best interests of their members and council tax payers. We are pleased that the Government has committed to exploring the possibility of wider reforms in this area.”
A new Pensions Infrastructure Platform (PIP) is being created to facilitate pension fund investment in infrastructure. The fund will be created for pension funds by pension funds. Its founding investors include the London Pension Fund Authority (LPFA), West Midlands Pension Fund and Strathclyde Pension Fund.
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