Nearly eight in 10 (77 per cent) UK pension savers believe their retirement savings should help build a stronger UK economy, according to research from IFM Investors, Nest and Border to Coast Pensions Partnership.

The joint report, Building the UK's Future: The Role of Pension Savings in Infrastructure, also found that 70 per cent believed UK pension funds had a responsibility to support UK infrastructure and growth.

It revealed widespread concern about the state of UK infrastructure, with only 29 per cent agreeing that the country was currently investing enough to meet its infrastructure needs, and just 7 per cent strongly agreeing.

At the same time, 77 per cent agreed that infrastructure investment could help the UK economy grow and create jobs.

The report also found that 69 per cent of respondents would feel proud knowing their pension was helping to fund projects in the UK, while 69 per cent agreed that pension funds should balance financial returns with wider economic and social benefits.

In contrast, just 14 per cent strongly agreed that pension funds should prioritise the strongest short-term financial returns even if this restricted infrastructure investment.

Nest Invest chief investment officer, Elizabeth Fernando, said: “These findings echo what we heard through Nest’s inaugural Members’ Assembly, where members indicated support for investment in the UK where it can deliver strong long-term value and contribute to economic growth.

“We hope these findings encourage more pension schemes to consider how pension capital can help finance the housing, transport, energy and digital infrastructure the country needs, in ways that generate attractive returns for members.”

The research suggested that savers were particularly interested in investments that could have a tangible effect on their daily lives.

Reducing cost-of-living pressures was the most commonly cited benefit of investing in UK infrastructure, selected by 46 per cent of respondents, followed by creating jobs and boosting economic growth at 42 per cent and improving quality of life at 38 per cent.

Improving transport and connectivity was selected by 30 per cent, while 26 per cent pointed to increasing access to affordable housing.

Border to Coast senior portfolio manager, Amarik Ubhi, noted that risk and return remained the primary consideration, but argued that UK investment could also generate wider benefits for Local Government Pension Scheme (LGPS) members.

“The vast majority of our two million members live, work and retire in the local areas where they have worked. So improved UK infrastructure, along with all the economic, social and practical benefits that come with such projects, will directly improve the quality of life for members.”

Meanwhile, the report also highlighted low awareness of where pension savings are invested.

Just 14 per cent of respondents said they were aware their pension was already invested in infrastructure, while half said they were not aware at all.

However, more information appeared to increase support: Initial support for allocating a small portion of pension savings to infrastructure stood at 55 per cent, rising to 72 per cent after respondents were shown examples and asked to consider the risks and benefits.

Over eight in 10 (82 per cent) said they would be interested in hearing more about how their pension money was being used for infrastructure investment.

The research also found that members were open to overseas capital supporting UK infrastructure.

Indeed, 83 per cent said they were comfortable with overseas investment in UK assets, although respondents preferred capital from countries viewed as stable democracies and close allies, including Australia and Canada.

IFM Investors head of client services for UK and Ireland, Phelim Bolger, said: “This research suggests pension savers recognise the role patient, long-term pension capital can play in funding infrastructure that supports growth, strengthens communities and improves everyday life.

“As one of the UK’s largest sources of foreign investment, Australian pension capital already helps finance the essential infrastructure communities and businesses rely on.

“These findings reinforce the value of long-term international investment working alongside UK pension capital to support future growth.”

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