GLOBAL - Governments should encourage pension funds to bankroll global infrastructure in the wake of inadequate public investment, according to a report published this month by the OECD.
Based on a two-year study, the report suggested tapping pension funds for infrastructure investments expected to average 3.5% of global GDP to 2030.
"There is likely to be greater demand for workable frameworks for strategic decision-making on infrastructure, which connect effective long-term planning with reliable, long-term sources of investment," said the report.
Australian infrastructure investor Macquarie Bank sponsored the OECD report. The bank’s European head, Jim Craig, indicated the involvement of pension funds’ "patient capital" would reduce infrastructure’s vulnerability to short-term planning.
In a press statement, he said the $18tr (€13.3tr) held by OECD pension funds would be ideally placed "for long-term ownership of essential community services" – partly because pension funds were acceptable as public-sector stakeholders.
Additional policy recommendations to OECD governments included the financing of infrastructure projects through public—private partnerships and regulatory reform aimed at tapping fresh sources of capital.
Globally, Macquarie manages listed and unlisted infrastructure assets worth €33bn, including $10bn in pension fund cash via two recently-closed infrastructure funds.