UK unleashes more pension capital for PE

Local government pension plans in the UK can now commit up to 30% of their funds to private equity, up from a previous 15% cap.

UK reforms signed into law earlier this month have increased the amount of capital that local government pension plans can allocate to limited partnerships – including private equity and infrastructure. 

Previously pension plans were only able to allocate a maximum of 15 percent of their total portfolio to limited partnerships, but this has been doubled to 30 percent.

A number of pension funds were banging up against the 15 percent limit because of their existing investments and this facilitates further investment, London Pension Fund Authority (LPFA) chief executive, Mike Taylor, told PE Manager.

The LPFA had been lobbying the government to increase the 15 percent threshold as it looks to commit more to the infrastructure asset class specifically, Taylor added.

Ultimately the LPFA hopes to combine the bargaining power of London pension funds to allow the merged entity to negotiate lower management fees and make available more capital for alternative assets, PEM reported last month