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UK pensions: building bridges

17 February 2014

As UK pension funds gear up to make substantial investments in public infrastructure, Anthony Lane considers lessons from the more mature Scandinavian market

If confirmation were needed of how British politics has been changed by the country's straitened finances, it came in the last week of January via a slew of media reports containing the words "innovative financing mechanisms" on both sides of the political divide.

The Conservative-Liberal Democrat coalition will soon undertake a review with the aim of encouraging institutional investors – in particular 89 local government pension schemes – to construct affordable housing. The opposition Labour party meanwhile was reported to be considering weakening the UK Treasury's grip on the nation's finances through devolution of revenue-raising powers to cities so they have the power to invest more in infrastructure.

Sandwiched in the middle were comments by Nigel Wilson, chief executive of the £440bn ($736bn) insurer Legal & General: "If we can bring communities with us and agree planning, we'd like to build several new towns within cities." L&G joined five other large insurers...