Pension fund leaders plan infrastructure investment drive to support communities and fuel UK economy

Almost two-thirds (65%) of UK pension fund leaders surveyed are expecting to increase their investment in UK infrastructure during the next 12 months, according to the latest research from GLIL Infrastructure (GLIL).

The survey polled 300 local government, defined contribution and defined benefit pension fund leaders in the UK. When asked about the main drivers of their plans to invest in UK infrastructure – over and above their fiduciary responsibility to members – supporting the UK economy was the top response, cited by nearly two in five respondents (39%).

The government’s focus on infrastructure investment (37%) and supporting local communities (34%) were the next most popular incentives for investment in the asset class.

Leaders also highlighted the challenges to increasing their exposure to UK infrastructure in the next year. Almost a quarter (23%) said ongoing economic instability was the biggest obstacle, while 22% cited the need to keep sustainability at the core of investment pipelines, in order to support the UK’s net zero ambitions, as the main challenge.

Ted Frith, Chief Operating Officer at GLIL Infrastructure, said: “It’s encouraging to see so many pension fund leaders planning to allocate further patient capital to investing in UK infrastructure. This is needed to finance more projects and help power the UK’s transition to a sustainable net zero economy.

“The last decade has seen significant inflows into the asset class in the UK from both domestic and overseas pension funds. However, more recently, other jurisdictions have been winning the competition for capital investment as the UK has been seen as a less attractive place to invest. Those in positions of influence should take note of our survey findings and work to address the perceived deficiencies in the UK marketplace, such as long delays due to planning applications, which are getting in the way of delivering the infrastructure upgrades the UK needs.

“While pension funds gain access to reliable, inflation-linked returns, infrastructure investing can also be a force for social good, supporting local communities through jobs, education and regeneration projects, as well as helping to drive the economy forwards.”

Leaders show green ambitions
Pension fund leaders surveyed by GLIL were also asked about infrastructure investment in relation to supporting the UK’s net zero targets.

More than two-thirds (70%) agreed that investment should prioritise the energy transition, with as many as 96% saying they will be focusing investments on infrastructure in related areas, such as battery storage, hydrogen, and carbon capture usage and storage.

Ted Frith added: “Pension funds recognise that they are stewards of the assets and custodians of the future, with the responsibility to ensure their infrastructure investments will help decarbonise industries and contribute to the transition to a net zero economy.”

GLIL is a partnership of UK pension funds specially designed to help pension fund members tap into the stable, inflation-linked returns that infrastructure investment offers. GLIL manages £3.6 billion of committed capital, with more than £3 billion deployed into a growing portfolio of infrastructure assets spanning renewable energy, battery storage, regulated utilities, ports and logistics, trains, hospitals and schools. GLIL’s latest investments include a portfolio of 247MW of operational UK solar assets as well as a significant minority stake in the UK’s largest telecom tower business.