PLANS are in hand to alter the investment patterns of the States employees’ pension fund.
It was revealed in the States debate last week that it had fallen by roughly £60m. in the past three months, and by £90m. since the turn of the year, to about £800m.
Treasury and Resources minister Charles Parkinson (pictured), who did not have the exact figure to hand when quizzed on it by Deputy David De Lisle in the States, announced yesterday that the superannuation fund stood at £807.5m. on 1 August.
He said the department was attempting to address the decline.
‘It’s down 10% this year, but if you look at the FTSE index or any other measure over the course of this year, then that would not be that surprising.
‘But my department is actively concerned about the asset allocation of the superannuation fund portfolio and we are reviewing it with a view to rebalancing it.
‘Something like 73% of the fund is invested in equities and from the beginning of my tenure, I’ve been concerned that this was too high.
‘I would like to reduce the exposure to equities and widen the asset class that it is invested in.’
Deputy Parkinson said this would be done following a detailed study of the assets and liabilities currently contained in the fund and assessment of the risk in which the States would allow itself to operate.
‘It will be determined by Treasury and Resources but on the advice of our professional advisers.’
Five specialist fund managers look after the fund and Deputy Parkinson said it was the intention of Treasury and Resources to meet each of them at least twice a year.
‘In the long term we believe that markets will grow but the next couple of years are likely to be rocky with above-average volatility.
‘From the day we took office, we have actively been reviewing this and we are keenly aware of the need to get the balance right.’
It had been mentioned by the previous board at the start of 2008 that investment in the commercial property market was likely, but Deputy Parkinson said this was now on the back-burner.
‘It’s not the right time at the moment. However, we do imagine that to change in the next year.’
Article posted on 6th August, 2008 - 2.29pm
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2 Article Comments
Suprise Suprise, on the BBC Radio Guernsey phone on Sun 16th March 08, Lyndon Trott said that significant extra profits (i believe he said £40M) was made by investing the public services employees pension funds in the equities market last year and as a result the states had been able to reduce significantly the amount that they have to contribute towards the fund each year as the employers contribution, saving the taxpayer a considerable amount of money towards general revenue / fill the black hole.
Last year the states employees pension contributions were raised half a percent without consultation to the man on the floor. Any wonder why states employees are disallusioned. The states employees pension has always been seen as ‘deferred salary’ and part of the whole employement package, ie. they take a lower salary than they would get in the private sector knowing that the pension forms part of the package. They were also told that their contributions were fixed and the states would make up the difference.
Also, in the past, the states have taken ‘payment breaks’, when they decided the fund investments were peforming so well they made no contributions into the fund at all.
Because of the above they shouldn’t moan now, just meet their committments.
Also I think States employees should have at least RPI pay rise + the extra half percent which was taken off them for increased pension contributions without consultation with the man on the shop floor.(This should have been balloted as it is a major change to the states employees Terms and Conditions).
It is not fair to employ someone under one set of terms and conditions and then move the goal posts when their ‘Tax Strategy’ (0-10) does not produce the revenue necesarry to meet the islands running costs.
When will people learn that the markets should not be used for societal necessities.
If people want to gamble, use their own cash.