Council pension fund hit by financial crisis
THE VALUE of the council workers’ pension fund has taken a hammering as a result of the global financial crisis in recent months, shedding £25m in value over the past six months.
At the end of September the fund stood at £183m, down from £208m at the beginning of the current financial year, a figure which is likely to have fallen further during a prolonged period of market turmoil in the subsequent three weeks.
SIC head of finance Graham Johnston’s message at a meeting of the pension fund management consultative committee in Lerwick Town Hall on Monday was that, although the losses were “undoubtedly regrettable”, investing heavily in equities was a strategy which had served the council well in the past two decades and that changing course would be unwise at present.
The pension fund showed an almost tenfold increase in value between 1990, when it stood at £25m, and last year when it peaked at around £225m. With the stock market at a low ebb, Mr Johnston agreed with committee member Bill Manson that it would be “a mistake at this time to pull out of equities and go into safer areas”.
While the latest news “tells a tale of a difficult time in the markets”, he told committee members that it was not all doom and gloom.
Contributions to the fund continue to exceed drawings from now-retired members, meaning there is no need for the SIC to liquidate any of its investments.
Net contributions were £6.5m this year, up from £5.4m last year and Mr Johnston said it was “a long way” from being a mature fund, though the ageing population demographic will pose a major headache for future generations.
For full story, see this coming Friday’s Shetland Times.