Australian superannuation funds may triple their investment in US infrastructure from the current $29bn (€26bn) by 2035, it emerged, as a delegation began a high-level trip to the US where they will meet with key US figures from the Trump administration, along with Wall Street banks to highlight Australia’s role as a global capital provider.
Priming itself for the visit, global investor IFM Investors owned by 15 Australian pension funds and UK pension fund Nest, released a so-called “policy blueprint” offering suggestions on how to unlock pension capital investment in US infrastructure.
The report calls on the US federal and state governments to consider an Australian-tested “asset recycling” strategy by leasing existing infrastructure to long-term investors like US and Australian pension funds and use the proceeds to build new infrastructure needed by communities, like schools and hospitals.
According to the American Society of Civil Engineers over the next seven years, the US faces a $3.7trn infrastructure funding gap.
Pension capital, including US retirement savings, is ideally suited for infrastructure investment given the long-term investment horizon, inflation-linked cash flows and alignment with the needs of local communities, IFM Investors said in its report.
Based on current trends, total investment by Australian pension funds into the US is set to increase from $500bn to just over $1.5trn by 2035 – creating attractive funding prospects to help America meet its growing infrastructure needs.
IFM Investors head of global external relations David Whiteley, said: “The US, like most developed nations, faces a clear challenge. Infrastructure needs are growing faster than the public funding needed to support them. US and Australian Pension funds can be part of the solution. Australia is home to one of the world’s fastest growing pension capital systems.”
Whitley said this blueprint outlined straightforward reforms to unlock pension capital for long-term infrastructure investment. With the right policy settings, pension capital can play a major role in modernising America’s infrastructure, delivering for US communities and for the long-term retirement savings of working people in both Australia and the US.”
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