Pickles unlocks council pension funds

Council pension funds could double the amount they are allowed to invest in local infrastructure by a further £22bn, a consultation launched by ministers today proposes.

At present a 15% cap applies on how much the 89 Local Government Pension Scheme (LGPS) funds, holding combined assets worth £148bn, can invest in limited partnerships – the asset vehicle often used for major property, private equity and infrastructure projects.

Under the terms of a consultation unveiled by communities secretary Eric Pickles today , this would be doubled to 30%, freeing up to £45bn of LGPS funds for house-building, transport or regeneration projects.

Mr Pickles said: ‘Unlocking town hall pension pots so they can be used to invest in vital infrastructure projects is a common sense decision that will help this country complete on a global scale and get Britain building.

‘This is potentially a huge development and investment opportunity we simply cannot afford to ignore that also allows us to maintain long-term value for money for the taxpayer,’ Mr Pickles added.

Lord Heseltine’s growth review, issued last week stated ‘there is a one off opportunity now to match the needs of pension funds with the urgent need to boost investment in the UK’s key infrastructure’. A recent report by the Future Homes Commission said local authority pension funds could help finance 300,000 new homes every year and tackle Britain’s housing crisis – were 15% of the assets held by the 15 largest LGPS funds pooled in a £10bn development fund.