Almost two thirds (65 per cent) of pension professionals expect to increase their investment in UK infrastructure over the next 12 months, research from GLIL Infrastructure has found.

The survey, which gathered views from 300 local government, defined contribution and defined benefit pension fund leaders in the UK, found that, aside from a fiduciary responsibility to members, supporting the UK economy was a key driver behind these plans to increase infrastructure investments, cited by 39 per cent of respondents.

This was followed by the government’s focus on infrastructure investment (37 per cent) and efforts to support local communities (34 per cent).

Climate was also a key consideration, as the survey found that more than two thirds (70 per cent) of pension professionals agreed that infrastructure investment should prioritise the energy transition.

In addition to this, as many as 96 per cent said that they expect to focus investments on infrastructure in related areas, such as battery storage, hydrogen, and carbon capture usage and storage.

However, the survey also highlighted the challenges to increasing their exposure to UK infrastructure in the next year, revealing that almost a quarter (23 per cent) said ongoing economic instability was the biggest obstacle.

In addition to this, 22 per cent said the need to keep sustainability at the core of investment pipelines, in order to support the UK’s net zero ambitions, has been the main challenge.

Commenting on the findings, GLIL Infrastructure chief operating officer, Ted Frith, stated: “The last decade has seen significant inflows into the asset class in the UK from both domestic and overseas pension funds.

"However, more recently, other jurisdictions have been winning the competition for capital investment as the UK has been seen as a less attractive place to invest.

“Those in positions of influence should take note of our survey findings and work to address the perceived deficiencies in the UK marketplace, such as long delays due to planning applications, which are getting in the way of delivering the infrastructure upgrades the UK needs.

“While pension funds gain access to reliable, inflation-linked returns, infrastructure investing can also be a force for social good, supporting local communities through jobs, education and regeneration projects, as well as helping to drive the economy forwards.”

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