A new PPP: The Pension-Public Partnership model
Summary
Lack of funding for infrastructure projects is harming growth prospects in many developed nations across the globe, but with pension funds ready to offer long-term, patient capital to reinvigorate infrastructure, the time for Pension-Public Partnerships
has come.
The most recent report card from the UK’s Institution of Civil Engineers (ICE) gives the UK between a B and D- for its infrastructure, ranging from local transport being assessed as ‘at risk’ and in need of greater maintenance,
to both the country’s water and strategic transport network passing and deemed able to cope with current demand. However, ICE’s assessment across even the highest-scoring sectors says these require further investment to keep pace
with the growing pressures placed on infrastructure. The UK government estimates the public and private sector will need to invest £600 billion to 2027 to meet its self-imposed target of 1.2% of GDP spent on infrastructure, with those
projects contained within 2017’s National Infrastructure and Construction Pipeline only amounting to £460 billion.
Careful stewardship of infrastructure can improve opportunities and employment outcomes for the wider community, equating to a social, as well as an economic good, created by the long-term, patient pension capital invested
Duncan Symonds
These staggering figures are needed to repair and improve the UK’s roads, rail and digital highways. The need for investment is apparent in two of these three areas – rail and roads –
where the UK’s rating for each sector lags behind its overall infrastructure ranking. At present, the country’s infrastructure comes 11th out of 137 countries, as assessed by the World Economic Forum’s Global Competitiveness
Report 2017-18. Decades of underfunding means much of the UK’s essential infrastructure is in need of significant investment and curbing economic growth.
While there is widespread agreement that trillions of pounds are needed to invest and fix UK infrastructure, greater involvement from the private sector is needed to address the shortfall. Part of the answer on how to achieve this may come from
Australia, which is progressively closing its own infrastructure funding gap by tapping the huge pool of funds tied up in its system of compulsory retirement savings.
About the author
Executive Director, Asset Management
Duncan Symonds
Joined in 2016
Duncan is responsible for the identification and implementation of asset management initiatives across our existing portfolio of infrastructure assets, and for the development and execution of transition plans for new investments. Prior to joining IFM Investors, Duncan was the UK Head of Infrastructure at WSP Group, where he was responsible for delivering asset management initiatives, growth of the rail and highways business, and new service lines. Previously, he worked as the Operations Director at Laing O’Rourke, where he led a team that managed a diverse portfolio of projects in the transport and utilities sectors, and also worked as a Business Development Manager and Project Lead. As Chief of Staff at Transport for London, Duncan led on a broad range of governance and operational workstreams including the development of the £16bn Crossrail project. Duncan brings an extensive track record in the engineering, construction and transport industries to his role at IFM Investors. Duncan is an alternative board member Anglian Water Group.