To solve the problem of underfunding, U.K.-based public sector pension funds should invest in other asset classes and could learn from those pension funds that are leading the way in infrastructure investing.
“Take Canada’s largest public pension funds, for example,” said Sir Merrick Cockell, deputy chairman of the London Pension Fund Authority (LPFA), in a speech last week. “Their investment strategy is geared heavily toward infrastructure and property, as opposed to publicly traded stocks and bonds.”
He noted that they also act as “co-sponsors” on bigger transactions with leading private equity firms, which allows them to have more control over their investment and to save on fees.
“They are not just investing in projects but making them happen,” he added. “This is something that U.K. funds should also have the opportunity to do.”
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