Six of the largest British pension funds will become founding investors in the new Pensions Infrastructure Platform, a government-backed initiative to pool pension assets to directly invest in domestic infrastructure projects, according to an announcement Thursday at the NAPF Annual Conference & Exhibition 2012 in Liverpool, England.
The six investors are the £36 billion ($58 billion) BT Pension Scheme, £18 billion Railways Pension Scheme, £11.2 billion Strathclyde Pension Fund, £11 billion Pension Protection Fund, £9.4 billion BAE Systems Pension Scheme and £8.9 billion West Midlands Pension Fund.
The next key step will be the selection of a manager to run the platform, according to a spokesman at the National Association of Pension Funds.
According to previous interviews with officials from the NAPF and PPF, an initial group of about 10 investors will commit an initial £1 billion to the new infrastructure platform.
The platform, which will be operated on a not-for-profit basis, will aim for a fee structure as low as 50 basis points. Investments will target inflation-linked, long-term returns of 2% to 5% over the Retail Prices Index. The PIP will aim to use a low leverage level of no more than 50% per project and across the platform to enhance returns.