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Pension fund fears downplayed by Kent County Council

Kent County Council has reassured pension holders after a bid to withdraw a £263m investment was controversially left in limbo by a top fund manager.

The county council, which manages a pension fund for 110,000 members, was in the process of requesting the withdrawal of £263 million from the Woodford Equity Income Fund in the face of concerns about its under-performance.

But that request was not acted on after trading in the fund was suspended - meaning it was not actually processed and is in limbo.

Retirement saving and pension planning. (11727080)
Retirement saving and pension planning. (11727080)

In a statement, the council said its pension committee had flagged up concerns about the performance of the fund in March.

It said: “At this stage there is no loss to the pension fund, and whatever the outcome there will be no impact on the council’s cash reserves or service provision.”

The statement said the £263m represented around 4% of the council’s total investments of £6.4bn from its pension fund.

The council said concerns over the performance of the fund were flagged up by its Superannuation Fund committee in March and a decision was made to reconsider the position at a meeting scheduled for June 21.

However, concerns about other investors withdrawing money led to it to bring forward a review and it was decided to withdraw the sum of £250m.

Kent County Council HQ (11727032)
Kent County Council HQ (11727032)

“The committee had an intervening meeting scheduled for May 31 to receive an update on the pension fund investment strategy although there was no intention to bring forward the review of Woodford investment.

"However, leading up to this meeting the overall value of the Equity Fund had reduced by a further £560m due to redemptions and further weak performance.”

“The committee resolved unanimously that the council should seek to redeem the investment with immediate effect and should not wait until June 21.

"Consequently, steps were taken to make the necessary arrangements to redeem the investment on Monday, June 3.”

The statement added: “The announcement on Monday that trading in the investment fund was suspended was not anticipated.

"KCC is disappointed that, as a major investor in the fund, we did not receive this prior notification. We do not know whether the decision to suspend trading was linked to the council’s decision to redeem.

"The council is committed to seeking the best outcome and could still seek a managed redemption in order to maximise the benefits for the pension fund.”

KCC said its investment was made in two tranches: £200m in 2014 and further £60m in 2016.

The investment with Woodford initially performed reasonably well, reaching a peak value in January 2017 of £317million.

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