The effects of inflation, volatile energy markets, and the cost of living crisis have been taking their toll on Orkney Islands Council‘s pension fund, councillors have been told.
A meeting of the Pension fund sub-committee was held this week, with the pension board.
They viewed a draft report which showed that the fund’s value decreased by £12.3million between March 2022 and the year before.
The fund has dropped from £520.8m to £508.5m.
In fact, at the year ended March 31 last year, there had been a surplus of £144.2m.
The council’s head of finance, Erik Knight, presented the draft report to councillors.
He said: “Page three shows the economic and market background, which highlights a fairly dark view about inflation and volatile energy and food costs.
“This is historical now and it’s got worse since. It’s tough times for these investments.”
At this time last year, the sub-committee was warned about the economic factors that could affect the fund.
Then, events in Ukraine were brought up, as one councillor asked if the situation should be considered a threat to the local authority’s pension fund.
The council leader, James Stockan, was first elected to the council in 2003.
He said: “This is the first time in my memory we haven’t outperformed the benchmark over the five-year period. It’s a little bit of a challenge going forward.
However, councillor Owen Tierney remarked that it isn’t “entirely unexpected that things aren’t going as well.”
He asked if Orkney’s fund is comparing poorly to those at other councils.
Mr Knight responded: “The markets are depressed across the board. So it’d be very unlikely that there are other pension funds that are doing significantly better.”
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