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

Jun 17 2009 by Liam Murphy, Heswall News

AROUND £800m has been wiped off the value of the pension fund for hundreds of Wirral employees.

The end-of-year figures also showed the Merseyside Pension Fund (MPF), which is administered by Wirral council, had to write off £10m because of the collapse of investment bankers Lehman Brothers.

A pensions specialist has now warned that, if the fund’s liabilities become too great, it could lead to it having to be bailed out by the taxpayer.

The dire state of the fund, which is primarily paid into by local government workers, is revealed in a report to the pension committee which is due to meet tomorrow (Thursday) to discuss the figures for 2008-09.

The fund managers have expressed confidence the MPF would recover and blamed the recent depression in world financial markets for the problems.

A council spokeswoman said: “We recognise people will be concerned at these figures, but must emphasise the fact we have stringent risk controls in place to ensure investments are not limited to any one type of asset or market.

“Changes to the overall value of the Merseyside Pension Fund will not affect pension entitlements in any way. Pensions are completely safe.”

The investments were valued at £4.255bn on March 31 last year.

But the report by Ian Coleman, Wirral’s director of finance, said the MPF returned -17.7% in 2008-09 and “declined in value by circa £800m over the financial year to March 31”.

In addition, about 6% of the pension fund is invested in “alternative investments” – primarily hedge funds.