UK - The £635.6m (€936m) Borough of Islington pension fund has denied union claims that its £131m deficit was caused by bad investment decisions.

The charge came from Gary Doolan, secretary of the Islington Branch of trade union GMB.

Last November the scheme agreed to monitor overseas equity fund manager Capital International more closely "because overall returns had been poor", Charles Dean, spokesman for the Islington council told IPE.

But he stressed that "any deficit increase" was due to other factors.

"At any one time and for many different reasons the deficit (the projected difference between assets and liabilities of the fund) may increase - for instance, because of longer life expectancies, higher earnings and pension increases of members, market yields on government bonds, and governmental regulation changes."

In addition, Capital had managed to again achieve the benchmark return 27.1% in the 12 months up to March 2006.

The last triennial revaluation in March 2004 showed that the fund was only 78.7% funded. A review one year later showed that the funding level rising to 84% in September 2005.

In 2004, the council agreed to address the funding level by putting an £8m into the Fund which for 2005/06. This sum will be inflated each year over the next 25 years.

Following the actuarial review employer contributions were increased to 9.9% for 2005/06 and 2007/08.
Asked how the fund will meet its liabilities, Dean said: "The strategy is linked to maximising investment returns within reasonable risk, maintaining as nearly a constant employer contribution rate as possible, and to take a prudent longer-term view of funding these liabilities.

"The LBI fund also employs a fund actuary to prepare valuations and advise on the funding strategy."