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Pension schemes pull back from infrastructure

Friday, June 8, 2012

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A leading publication for infrastructure finance and investment published its proprietary ranking of the 30 largest infrastructure investors by size this week, revealing the total figure for direct infrastructure investment by pension funds has decreased to $49.46bn this year from $53.9bn last year.

The Infrastructure Investor 30 (II 30) study, by infrastructure publication Infrastructure Investor, reveals that despite an increasing demand for this type of investment from governments worldwide, schemes have invested less this year than in the previous year.

"At a time when governments around the world are increasingly seeing pension funds as a possible solution for the long-term funding gap for infrastructure, the overall decline in the availability of capital from the top pension funds is a sobering finding," said Andy Thomson, senior editor of Infrastructure Investor.

"Questions will arise about whether this is due to a plateauing or declining interest in the asset class – which seems unlikely given the enthusiasm generally expressed in surveys – or whether there are structural issues standing in the way of pension funds making the level of commitment to the asset class that they would like."

The ranking is based on the amount of direct infrastructure investment capital each institution has formed over the five-year period from 1 January 2007 to 30 April 2012. 

The five-year capital formation total for the II 30 as a whole dropped to $171.5bn this year from a high of $183.1bn in 2011.

In the UK the infrastructure debate is currently ongoing among pension schemes after the National Association of Pension Funds (NAPF) and the Pension Protection Fund (PPF) agreed with the Chancellor of the Exchequer George Osborne to form a platform enticing pension money into UK infrastructure.

Despite the results of the survey some individual pension funds abroad are emerging forces in infrastructure. The QIC, the Queensland public pension manager, made a steep climb from the 22nd ranking in 2010 to sixth place this year. And Canada's Ontario Teachers' Pension Plan, increased it's investment from $5.81bn last year to $6.87bn this year.


First published 06.06.2012