North Yorks funding level drops to 35%
UK - North Yorkshire Pension Fund saw its funding level drop to 35% in March 2009 compared with 68.8% two years earlier.
Figures from the pension fund's statement of accounts for 2008-09 showed the value of the fund fell to £828.8m (€961m) from £1.22bn (€1.42bn) at 31 March 2008, a fall of £394m over the last year.
The North Yorkshire pension fund, which has 61 employer bodies and over 61,000 members, had its last triennial actuarial valuation in March 2007 when it recorded a funding level of 68.8% and a deficit of £602m.
However, the statement of accounts for the year ending 31 March 2009 showed an interim valuation - ahead of the next triennial assessment in 2010 - reported a solvency position of 35% and an estimated deficit of £1.52bn.
The report noted the fall in solvency was a "combination of pressure on investment returns in unprecedented financial market conditions during 2008/09 plus the "growth" in liabilities, which are valued using gilt prices".
A spokesperson for the pension fund highlighted the position of the fund is expected to have improved since March, as although it is currently waiting to finalise its second quarter figures initial data suggests the value of the fund has already increased to around £950m.
The council pointed out the markets started to improve in mid-March so it is "cautiously optimistic", and admitted while it is obviously "very concerned" about the funding level it remains "reasonably confident in our investment strategy, and feel that although we have had a difficult time the volatility in the markets has not proved the strategy incorrect".
That said, the fund is "of course always looking to improve things" but highlighted it is not doing anything "too drastic".
The pension fund has allocated the majority of its assets between six investment managers - Baillie Gifford, Fidelity International, Standard Life Investments, CAAM, ECM and UBS - although it also has a small equity portfolio of around £1.2m invested with RC Brown Investment Management which is based on ethical criteria at the request of one particular employer.
The report also noted the pension scheme had appointed ING Real Estate to manage a global indirect property portfolio in November 2008 but "market conditions proved too uncertain to commence investing by the year-end", while it confirmed the scheme's withdrawal from Hermes UK Focus Fund and European Fund is "expected to be completed by September 2009". (See earlier IPE articles: North Yorks awards ING global property mandate and North Yorks to drop Hermes European focus)
Meanwhile, minutes of the North Yorkshire pension fund committee meeting in May revealed that after North Yorkshire and Merseyside pension funds lost out on becoming lead plaintiffs in a class action against Royal Bank of Scotland, the scheme is still waiting to hear if it can participate. (See earlier IPE article: US pension funds selected to lead RBS action)
The pension fund's investment adviser, Phillip Williams, told the committee that "no decision had been taken by the US Court as to whether claims from the UK and European investors could be included in the action", but confirmed the law firm Coughlin Stoia Geller Rudman and Robbins (CSGRR) would provide advice on the available options "in due course".
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