Pension Insurance Corporation is concerned about the effects of Scottish independence
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Pension Insurance Corporation, which manages almost £10bn on behalf of nearly 100,000 pension scheme members, has turned down a number of potential investments in Scotland because of uncertainty over September’s independence referendum.

Mark Gull, co-head of asset and liability management, said PIC had “passed” on the opportunity to provide debt for several infrastructure projects, given uncertainty over the future regulatory regime in an independent Scotland, and even concerns over which currency any debt would ultimately be repaid in.

“There are certainly Scottish things we have turned down because of their Scottish nature,” said Mr Gull. “There is a small, but definitely material, probability that Scotland votes for independence, and if it does, that does not make it investment grade in our book. We want to have certainty.”

London-based PIC typically lends money for between five and 30 years, matching the long-term nature of its liabilities. This means it requires long-term visibility.

“We are buying [assets] for the life of the cash flows. We have to make sure they are there to pay the cash flows,” said Mr Gull. “It is probably going to be all right, but that is not enough for us. Regulatory certainty is very important to us.”

However, Mr Gull said PIC had provided funding for student accommodation in Edinburgh last year, reflecting its confidence in some institutions. “Edinburgh university will stand on its own two feet,” he said.

PIC has conducted more than 50 pension buyouts since 2006, including a £1.5bn deal, the largest seen in the UK, covering 20,000 members of the EMI pension scheme. It has also taken over pension liabilities from the likes of Cadbury, Boots and the London Stock Exchange.

Alongside its portfolio of government and corporate bonds and loans, it has invested £2bn in the infrastructure sector.

In January it provided £74m of funding for a private finance initiative bond to allow Manchester City council to regenerate 1,100 homes, following on from a similar £72m deal with neighbouring Salford in September 2013.

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