Partner Insight: Infrastructure for good? It's time to get real with your pension

Could offering exciting real-world investment opportunities simultaneously help to improve engagement, global infrastructure and financial outcomes?

clock • 6 min read
Partner Insight: Infrastructure for good? It's time to get real with your pension

More than five million1 DC (defined contribution) pension savers rely on Legal & General to act in their best interests when it comes to helping them secure their financial futures. It's a huge privilege and an even greater responsibility – which is why we're always examining how we can unlock opportunities to maximise returns for our members.

Yet to make a real difference to financial futures, we need to do more than just deliver long-term returns. We need to inspire our DC members to invest more in their futures in the first place.  And to do that, we need to offer a range of investment opportunities that truly captures the imagination through their potential to deliver exciting real-world change. We believe infrastructure investing could be the answer.

What is infrastructure investing?

At its core level, infrastructure is a physical network of interrelated systems and facilities that support the day-to-day functioning of a modern society. For instance, infrastructure can include everything from bridges to broadband connectivity, water pipes to waste disposal facilities and roads to railways.

In addition to its crucial role in ensuring the smooth running of everyday operations, infrastructure is also key in enabling the societal shifts necessary amid an evolving world. Chief among these is the infrastructure transformation required to adapt to and mitigate the effects of climate change.

By investing in private market investments such as infrastructure via their pension, we believe DC savers can not only target potentially attractive long-term returns from the opportunities that the climate transition can present, they can also play an important role in helping to make the transformation possible.

Inspiring a generation of investors

In this vein, we're focusing on researching infrastructure- centric opportunities in important real-world themes such as clean energy and digital telecoms, the future of transportation, and fresh waterFor clean energy, investors could see their capital help finance both on- and offshore wind farms, solar projects or energy storage solutions. Fresh water investments could include exciting new technologies such as smart water systems to drive efficiency gains or desalination plants to improve availability, while digital telecoms and transportation could help support faster broadband networks and intelligent road systems.

When DC savers think of their pensions, we know from our research that it's not only a secure financial future they're targeting – they also want ESG action. That's why we're focused on the solutions that we believe can inspire members to engage with their pensions in the knowledge that they are investing for both their retirement and the greater good.

Momentum is building for change

At L&G, we recognised the potential for adding long-term infrastructure investments to DC members' portfolios and began investigating their inclusion in our investment strategies some time ago.  Momentum does now appear to be growing across the industry: in February last year, an expert panel comprising pensions and venture capital specialists was formed to examine how retirement funds might be directed into British start-up projects.

This followed the signing of the UK Government's Mansion House Compact, where 10 leading UK pension providers, including Legal & General, committed themselves to allocating 5% of assets in their default pension funds to unlisted equities by 2030.

Real world people

By offering access to tangible investment themes such as clean energy, transportation, telecoms and water, we aim to inspire DC members' interest in their pension funds and help them to appreciate the impact that their fund's investments have on issues that affect their daily lives.

As well as helping to bring investments to life for DC members, and offer the potential for long-term returns, we believe that infrastructure opportunities that seek to deliver tangible and exciting real-world benefits could also help to boost engagement and encourage positive attitudes towards savings and financial wellbeing more broadly.  So, DC savers, if you want to keep your financial dreams on track and invest in a way that could make a positive difference to the world you see around you, it could be time to get real with your pension.

Find out more

 

Key risks

The value of investments and the income from them can go down as well as up and you may not get back the amount invested. Past performance is not a guide to future performance.

Important information

The information in this document is for professional investors and their advisers only. This document is for information purposes only and we are not soliciting any action based on it. The information in this document is not an offer or recommendation to buy or sell securities or pursue a particular investment strategy and it does not constitute investment, legal or tax advice. Any investment decisions taken by you should be based on your own analysis and judgment (and/or that of your professional advisors) and not in reliance on us or the Information.

This document does not explain all of the risks involved in investing in the fund. No decision to invest in the fund should be made without first reviewing the prospectus, key investor information document and latest report and accounts for the fund, which can be obtained from https://fundcentres.lgim.com/.

This document has been prepared by Legal & General Investment Management Limited and/or their affiliates (‘Legal & General', ‘we' or ‘us').

The information in this document is the property and/or confidential information of Legal & General and may not be reproduced in whole or in part or distributed or disclosed by you to any other person without the prior written consent of Legal & General. Not for distribution to any person resident in any jurisdiction where such distribution would be contrary to local law or regulation.

No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this document. The information and views expressed in this document are believed to be accurate and complete as at the date of publication, but they should not be relied upon and may be subject to change without notice. We are under no obligation to update or amend the information in this document.

Where this document contains third party data, we cannot guarantee the accuracy, completeness or reliability of such data and we accept no responsibility or liability whatsoever in respect of such data.

This financial promotion is issued by Legal & General Investment Management Limited.

Legal and General Assurance (Pensions Management) Limited. Registered in England and Wales No. 01006112. Registered Office: One Coleman Street, London, EC2R 5AA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, No. 202202.

LGIM Real Assets (Operator) Limited. Registered in England and Wales, No. 05522016. Registered Office: One Coleman Street, London, EC2R 5AA. Authorised and regulated by the Financial Conduct Authority, No. 447041. Please note that while LGIM Real Assets (Operator) Limited is regulated by the Financial Conduct Authority, it may conduct certain activities that are unregulated.

Legal & General (Unit Trust Managers) Limited. Registered in England and Wales No. 01009418. Registered Office: One Coleman Street, London, EC2R 5AA. Authorised and regulated by the Financial Conduct Authority, No. 119273.

© 2024 Legal & General Investment Management Limited, authorised and regulated by the Financial Conduct Authority, No. 119272. Registered in England and Wales No. 02091894 with registered office at One Coleman Street, London, EC2R 5AA.

Code D007962

 

Advertisement

More on Defined Contribution

Partner Insight: Infrastructure for good? It's time to get real with your pension

Partner Insight: Infrastructure for good? It's time to get real with your pension

Could offering exciting real-world investment opportunities simultaneously help to improve engagement, global infrastructure and financial outcomes?

Rita Butler-Jones, Head of DC, L&G
clock 09 July 2024 • 6 min read
Partner Insight: TPR's latest DC report – the continuing trend of consolidation

Partner Insight: TPR's latest DC report – the continuing trend of consolidation

The Pensions Regulator (TPR) reports on the occupational DC trust-based landscape

Sharon Bellingham, Scottish Widows Master Trust Lead and Scheme Strategist
clock 26 June 2024 • 3 min read
Credit and social impact in DC investment

Credit and social impact in DC investment

Delivering positive social, as well as financial, outcomes for members

Professional Pensions
clock 07 May 2024 • 13 min read
Trustpilot