Around £800m wiped off the value of Merseyside pension fund

Jun 12 2009 by Liam Murphy, Liverpool Daily Post

According to a report to be presented to the Pensions Committee, “the MPF portfolio was hit by the collapse of Lehman Brothers necessitating a £10m write-off”, but it is hoped some of this may be recovered through the bank’s administrators.

The report said: “Nevertheless, the return for the year at -15.4% was better than comparable indices and was helped by contributions from exposure to the US dollar.”

MPF pays out to 30,000 former public sector workers and 50,000 current employees pay into it. About 20,000 have frozen or deferred assets in the fund.

Howard Hackney, a former partner of accountancy giant Grant Thornton and now running his own chartered accountancy and business advisory service Howard Hackney LLP, said those paying into or receiving the pension fund should worry.

He said: “The performance is better than average based on the figures in their report, but it is still pretty poor.

“None of the current beneficiaries have much to worry about, nor do those who are employed, because at the end of the day the government can raise money through additional taxes to see them right.

“It is the taxpayers who may have to foot the bill.” The MPF spokeswoman said: “In 2008, the fund met its benchmarks despite very difficult market conditions.

“The fund was ranked 26 out of nearly 100 local pension schemes over the year and has consistently been in the top third of all local authority funds for the past five years.

“Changes to international markets mean that the value of the Merseyside Pension Fund fluctuates regularly, reflecting the wider economic picture.

“It is important to understand local authority pension funds invest over the long-term to pay benefits in 40 to 50 years’ time.

“The stewardship of £3.7bn of assets is not something we take lightly and we expect the value of the fund to recover over time as the economic climate improves.”

According to the fund managers, MPF was ranked fourth in an examination of the UK’s largest occupational pension schemes and second of all local government pension schemes.

The spokesman added: “It was also placed ahead of funds including British Airways, the BBC and BP plc for its ‘well thought through approach on many of the key areas of responsible investment’.”