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.
Yesterday we are told that ?4 out of every ?5 in public sector pensions will be paid by taxpayers over the next 5 years. The report should have made explicit that this did not apply to the local government pension scheme, which is fully funded into the future. This is clear from today's report highlighting the assets. So does the Secretary of State now see the advantages of maintaining the scheme? If so, perhaps he could approve the proposals agreed between the LGA and the unions.Maurice Barlow, Principal Planning Officer, Solihull MBC, Added: Tuesday, 6 November 2012 05:06 PM
I wonder why it was set at 15% - maybe something to do with risk?Graham Rowe, Crawley BC, Added: Tuesday, 6 November 2012 03:26 PM
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