How Can UK Pension Funds Step Up for Infrastructure?

"Everybody wants good roads, bridges, and infrastructure, but nobody wants to pay for it." This quote, originally from a U.S. state representative, still hits home—especially here in the UK.

With our infrastructure under strain and public finances stretched, isn’t it time for UK pension funds to take a bigger role?

According to research by GIIA (Global Infrastructure Investor Association), 11 million UK pension savers are already indirectly invested in infrastructure through over 150 pension schemes. Without realising it, your pension pot might be funding renewable energy, water networks, ports, rail, hospitals, or schools.

But there’s a catch: the UK lags far behind countries like Canada and Australia when it comes to pooling pension assets for infrastructure. This has been the case for decades, largely because their larger funded schemes and direct investment teams have consistently allocated higher proportions to infrastructure. The result? A lot of our infrastructure is now owned by overseas pension funds.

This reality has been referenced by the current Chancellor Rachel Reeves, and her predecessor, Jeremy Hunt in their respective annual Mansion House speeches, both of which point to encouraging pension schemes to invest more of their capital into infrastructure.

So, where do we go from here?

What’s the Opportunity?

Shifting more UK pension money into infrastructure could unlock some big wins:

‍

• Relieve the taxpayer burden: Let’s face it, the government’s not going to be able to fully fund what’s needed to fix our ageing infrastructure. With the state of public finances, this seems unlikely any time soon.
  ‍
• A long-term approach: Pension funds are natural long-term investors. They don’t need a quick profit, which makes them a great fit for projects like renewable energy, rail, and schools. Could this help reset the public debate about private ownership of public assets?
  ‍
• Visible impact: Infrastructure investment directly benefits communities. Some schemes, like NEST, even take pension savers on field trips to show them what their money is helping build—whether it’s a wind farm or a new school.

By increasing allocations to infrastructure, UK pension funds could deliver better services, create a more sustainable future, and give pension savers a direct stake in the country’s progress.

‍

What’s not to like?

‍