Speaking on Wednesday at the National Association of
Pension Funds’ investment conference in Edinburgh, Mr Salmond said £2.5bn would
be invested in infrastructure in education, health and transport over the next
few years using non-profit distributing funding structures. This involves the
public sector paying an annual charge once the infrastructure is built.
‘Pension funds are most likely to invest in projects such
as these after the initial construction phase has been completed. However the
fact that they are just about to begin the tendering or construction phases
makes this an ideal time to look at the possibilities that they present,’ he
Initiatives such as the National Housing Trust also offer
the prospect of long-term returns, he said. Scotland’s housing associations
have an annual turnover of over £1bn and hold assets worth £10bn. They are
funded by around £3bn in private finance and £7bn from taxpayers.
Mr Salmond said: ‘The sector’s strong balance sheet,
together with its effective regulation and financial stability, offers a safe
haven for pension fund investment.’
Alluding to the UK government’s ongoing discussions with
pension funds encouraging them to invest in infrastructure, Mr Salmond said he
hoped to see a ‘major step forward’ in government policy in Chancellor George
Osborne’s March 21 budget.
‘I believe appropriate incentives should be brought
forward by the Treasury to encourage pension funds to finance large-scale
infrastructure and other capital investment projects throughout these islands,’
‘This would help boost jobs and investment and thereby
increase economic growth rates north and south of the border.’
For funds and their members, Mr Salmond said Scotland was
a ‘safe, predictable, long-term and ethical location’ for pension fund
On the broader benefits of the investment, he said. ‘The
long-term success of the economy depends upon a mixture of higher investment
and smaller government debt and current account deficits.
‘We must find ways to focus on investments that provide
long-term returns - something that is good for business itself but also good
for the long-term productive capacity of the economy.
‘Therefore pension fund involvement in infrastructure –
both private and public – could potentially make a major contribution to that
necessary re-balancing of the economy,’ he added.