There exists a substantial track record of pension funds already investing in infrastructure. The government-run Canada Pension Plan holds 4.9 percent of its C$123.9 billion in infrastructure investments and the Ontario Teachers' Pension Plan has infrastructure assets valued at C$7.9 billion (all valued at 31 December 2009).1
Other major pension funds have reported their commitment to the sector. For example, in early 2010 CalPERS announced plans to invest around US$1.3 billion in infrastructure.2 It is estimated that US$24 trillion is invested in pension funds globally (see Figure 1). Even if only a small percentage of that amount, say 1 percent, is invested by pension funds in infrastructure, then that would represent a potential investment of US$240 billion.
Beyond the financial rationale, there is also a philosophical fit since pension funds, whether public or private, can be regarded as part of a country's "national savings". Investing in a country's infrastructure is akin to investing in its future.
If there is a potentially significant pool of pension funding that could be invested in infrastructure and a persuasive philosophical argument to do so, why is pension fund participation in the market still relatively small?