The UK needs pension “superfunds” to invest in green projects to help the country recover from the economic fallout of the coronavirus, think-tank The Social Market Foundation (SMF) said.
Ministers should encourage pension funds to merge into fewer, larger funds able to invest large sums in big long-term projects, the organisation said. These funds could be used to build roads, power sources and communications networks, whilst creating more jobs.
The report also said ministers should be ready to take risks and spend public money to support innovative infrastructure projects and new renewable energy markets in their early stages.
The SMF noted that the government had launched consultations on pension consolidation in 2018 and 2019 but despite Prime Minister Boris Johnson’s previous support for the plans, ministers have yet to make a decision on this.
The SMF said politicians must offer certainty and financial clarity to investors about the profits they can make from funding infrastructure projects.
It also emphasised the need for a cross-party commission with an independent chair to establish a vision of the UK’s infrastructure needs over the next decade or so.
According to Richard Hyde, senior researcher at the think tank: “The best way to support the infrastructure the country urgently needs in the long-run is to make better use of the billions of pounds held in pension funds that could be profitably invested in helping Britain on its way to a green recovery.”