Thursday, 24 April 2014

Council pension funds 'should invest in housing'

Local authority pension funds should pool resources to increase their investment in social infrastructure, including housing, a new report has said.

The study from a group of bodies including the Smith Institute, the Centre for Local Economic Strategies, Pension Investment Research Consultants and the Local Authority Pension Fund Forum, found that funds are beginning to show greater interest in local capital projects.

The report also called on the government to do more to allow funds to invest in the sector.

It identified several areas that could be improved, including the establishment of joint ventures between funds, encouraging ‘pooling arrangements’ and developing framework agreements.

Despite the increased interest, none of the funds interviewed for the study would be prepared to accept lower returns in exchange for achieving greater social benefit. With regard to investment in social housing, it also found that funds ‘were waiting for others to lead’.

Paul Hackett, a director at the Smith Institute, said of the study: ‘[It] shows that there is growing appetite for ‘alternative’ social investment. The challenge is scaling up.  A new agency to act as clearing house for these type of investments would help achieve that.’

Neil McInroy, chief executive at CLES, added: ‘This report provides clarity for the local government family and highlights the need for better dialogue between local enterprise partnership, local government and pension funds.  We need more market responsive and ready investable opportunities.  A new government backed agency as well as shared local pension fund vehicles for the pooling of impact investment funds, are significant options in this regard.’

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