A group of fund managers, lawyers and bankers led by law firm Pinsent Mason and the Redington consultancy have planned to bring a new pension investment platform to the market in a bid to improve yields. The group is in talks with a number of pension schemes and already has commitments up to £500 million to invest in this new platform.
New pension investment platform from Pinsent Mason and Redington
According to reports, this new investment platform will be used to fund cash-strapped infrastructure projects. Infrastructure projects used to be funded by banks, but the liquidity shortage since the 2008 banking debacle has made banks wary of investing in infrastructure. Funding infrastructure is a natural extension of pension funding schemes, and can yield not only good returns for the concerned parties, but also improve the nation’s infrastructure.
Infrastructure debt in United States
Infrastructure debt is a major component of pension schemes in the United States. However, this, along with the Pensions Infrastructure Platform, will be the first such pension investment scheme in the United Kingdom.
United Kingdom infrastructure projects good for pensioners?
The United Kingdom government expects expenses of up to £40 billion over the next three years in various infrastructure projects. It is relying on institutional investors - including various pension schemes - to pick up the tab for this expense. According to Pinsent Mason, the returns on infrastructure debt can be favorable for both investors and borrowers.
Bank of England critized for keeping interest rates low
In other news, pension funds and seniors’ groups criticized Bank of England for keeping interest rates as low as 0.5 percent, which, they argue, penalizes prudent savers. The Bank of England has bought up to £325 billion worth of government bonds since the economic crisis of 2008 in an attempt to stop the economy from collapsing.
According to pension funds, buying government bonds has kept the interest rates artificially low, which has eventually affected ordinary consumers who cannot get adequate interest on their saving.