Andrew Short asks if plans to get additional investment in infrastructure, announced in George Osborne's autumn statement, will be attractive to UK pension schemes or a bridge too far?
There is also the question of how smaller schemes get in on these deals; they could miss out unless some sort of pooled vehicle is created.
The problem is that most UK pension funds are simply too small and cannot afford the expertise needed to analyse and research the increasingly complex world of infrastructure investments.
Cooper also feels it will be impossible to deal with the smaller schemes on a disparate basis.
Cooper says: "They would have to somehow pool their resources and use a fund manager of some description and that's a substantial role for any fund manager to take on. The skill set you would need would be quite high.
You're going to be taking on a lot of different types of infrastructure assets and you're taking equity and debt risk together - one shouldn't underestimate the difficulties that might occur."
Defined deficit
Many pension schemes are now closed to new members and future accrual, many have huge deficits and the thought of hiring expensive teams to assess these projects or even to understand the complex risks of these projects is beyond them.
This seems to be the big flaw in the government's reasoning and they may not get the volume of investment required because pension schemes may not have the available cash. If you were an 80% funded scheme this kind of activity would be out of reach.
Why would they just not direct to resources into other areas for the same risk/return profile.
Before the NAPF announced its memorandum of understanding with the government, senior policy adviser David McCourt made the comment that it's important to understand that pension schemes are not swimming in cash.
"They don't tend to keep reserves in huge amounts," he adds, "There will need to be some re-allocation."
Even with memorandums that the NAPF, PPF, the Greater Manchester Pension Fund and the London Pensions Fund Authority have signed, it is not a firm deal and the four have yet to say how much they'll invest.
If they decide to put anything in it will mostly be small amounts of money. The BT Pension Scheme, which is the UK's largest single pension fund and by reputation an adventurous scheme, has put a miniscule £500m of its £37bn assets under management into infrastructure.
Again it comes down to the argument that these projects are too risky for them to invest in. Investing in infrastructure is pretty similar to investing in commercial property where a fund owns a store and collects rent from shop owners. However, there is major construction risk and these projects don't start generating returns for years.
It's also not easy to make sure these projects are built to the original timescales and costs. There is also the daily operations and running the project. What if people stop using it, customers go bust or it needs to be refurbished.
The national infrastructure plan 2010 came off the rails; the treasury tried to tempt schemes in but never got that far - so what's new.
One trustee of a fairly large scheme put it bluntly and said that pension schemes are not here to bail out the government, they are here to make sure members get outcomes on retirement; he also commented these projects are hard to assess and that if they're not appropriate they'll not put their cash into them.
It would seem that Osborne and Cameron are clutching at straws to get the ailing economy moving again, next they'll be clutching at the trouser legs of trustees and scheme managers pleading with them to invest.
