Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

LGA explores pension fund investment into PFI schemes

  • Comment

Proposals for local government pension schemes to club together and invest in private finance initiative (PFI) schemes have been discussed by the Local Government Association.

Under the plans would see council pension funds pour both debt and/or equity into PFI schools programmes to produce “a more liquid, efficient and competitive PFI investment market”.

Increased competition in the PFI funding market could have a beneficial impact on reducing PFI borrowing costs, the LGA said.

 “It is recommended that officers be authorised to explore further with Partnerships for Schools, Partnerships UK, local authority pension funds and fund managers what scope exists for the creation of professionally managed funds designed to provide equity and/or debt for local authority PFI schemes,” a report to the association’s executive last week read.

Officials did however concede there were potential conflicts of interest between councils as users of PFI and, via their pension funds, investors seeking to maximise their returns.  

New Local Government Network director Chris Leslie backed the proposals. “Historically, individual pension funds have been too small to invest in Building Schools for the Future projects but collectively they would be able to. It is a safe, legitimate opportunity with a good rate of return.

“Over time there is no reason why infrastructure investment should only be for pension funds money - it could be for pooled council reserves as well,” he said.

Mr Leslie also warned that local government needed to take a more proactive approach to how it managed its substantial cash reserves.

“An incoming government may well see the £30bn held by councils as low hanging fruit to get their hands on. Ultimately it is taxpayers’ money but councils should steer where it is invested.”

 

If you would like a trial subscription to the new-look LGC, please go tohttp://freetrial.lgcplus.com

  • Comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.