Council pension fund value falls due to coronavirus

A pension fund for the five Gwent councils has fallen in market value by £201 million following the coronavirus pandemic.

The pension fund, of which Caerphilly County Borough Council is part of, is run by Torfaen Council, with Newport, Blaenau Gwent and Monmouthshire councils also involved.

A Torfaen council report says that 2019 to 2020 was an “extremely challenging year” for the Greater Gwent (Torfaen) Pension Fund after the coronavirus pandemic led to falls of between 25% and 30% in the stock markets.

The pension fund’s membership is made up of staff from all five Gwent councils plus staff from other organisations including town and community councils.

The report says the full impact of the coronavirus pandemic on the fund is uncertain.

Last year, the fund had a negative investment return of -7.05%, mainly due to a 15% drop in the final quarter, which was at the start of the coronavirus outbreak in Wales.

The pension fund’s value fell from £2.9 billion to £2.7 billion.

This is despite an increase in the contributions to the fund from members and employers of £11.7 million to £129.8 million. The fund has more than 61,000 members and supports 18,000 pensioners.

The report says: “From an investment perspective, this report reflects on a year that had for the most part seen a continued period of positive market progression, similar to what had been experienced in previous years.

“Conversely, major market uncertainty and volatility was experienced throughout the course of quarter one 2020, which saw the largest quarterly market falls within the last 10 years.”

The report acknowledges that the fund’s income is still exceeding expenditure, however the surplus is falling.

The report says the immediate focus is paying the benefits of its pensioners and processing retirement and death benefits.

It says: “The fund has appropriate contingency plans in place, and has reviewed all of its processes and procedures in line with the fund’s revised working arrangements to ensure that it can continue to provide a full service to its members.

“In the forthcoming months, the fund will face challenges as the situation evolves and a new “normal” emerges.”