Poor investments leave Orkney Islands council pension pot £47.7m behind budget

Orkney islands council’s pension pot was left £47.7m behind its budget, as its investment gains came in much lower than expected.

The council had been expecting the sub-committee’s budget to come at a surplus of just under £16.5m at the end of December.

However, this wasn’t the case.

According to the council’s head of enterprise and sustainable regeneration, Gareth Waterson, “due to macro-economic conditions the world markets had taken a bit of a tumble.”

For the pension fund sub-committees budget, this meant a return of negative £32.5m from its investments.

However, Mr Waterson also reported underspends for others such as pension funds operations, admitted bodies, and administration.

Notably, the council saw less money drawn out of the fund by people drawing their pension, a lump sum, or transferring benefits. This meant the cost for pension fund operations came in at £1.2m underspent.

He also said their investments have bounced back from the end of December, with the fund recovering £26.5m of its budget deficit as of the end of January.

Councillor Owen Tierney asked how the fund was faring compared to those at other Scottish councils.

The councillor said, as far as he was aware, Orkney council’s fund tended to perform above the average seen at the country’s other local authorities.

Mr Waterson said he believes that’s still the case. While he couldn’t offer a direct comparison at this time, he said there would be a valuation within the current year.

He said: “Different funds will be following different investment strategies.

“Our fund is still relatively immature in that we’re still taking in more contributions than we’re paying out in pensions.

“Other funds will be paying out more than they’re taking in contributions

“They’ll be following a different strategy which will drive a different investment mix.

“So there’s a bit of wait and see. But we’re still in a good position.

“I would be fairly confident that we may not be the best but will certainly be one of the better positions.”