Calls for calm as £1bn of Merseyside Pension Fund impacted by fallout from mini budget

The money is invested in government bonds, listed on the London Stock Exchange.

Local government workers who have invested in the Merseyside Pension Fund (MPF) should ‘not be concerned’ despite fallout from the mini budget affecting an estimated £1bn worth of investments.

Twelve percent of the MPF is invested UK government bonds, also referred to as gilts, the future of which has been debated after Chancellor Kwasi Kwarteng’s budget anouncement last week.

UK Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng have both defended the mini-budget announced on Friday 23 September (Pic: Getty Images)

But assurances have been made by MPF Director of Pensions Peter Wallach and Chair of the Pensions Fund Management Committee Pat Cleary.

The pair spoke at a pensions committee meeting this week and were questioned by Bidston and St James Ward Labour Councillor Brian Kenny about any implications for the MPF.

The Chancellor’s mini budget has been widely criticised and led to a drop in the value of the pound and a £65bn bailout by the Bank of England.

UK gilts are British government bonds issued by HM Treasury, listed on the London Stock Exchange. This week the Bank of England announced the temporary purchases of long-dated UK government bonds in a bid to settle the market.

Cllr Kenny said: “Since the so-called mini budget last Friday we now appear to be in a serious financial situation in this country and I did read a report that there could be serious implications for pension funds.

“Am I right to be concerned about any implications for the Merseyside Pension Fund or if not can some assurances or clarifications be made?”

Mr Wallach said: “I think the most important point to make is that as a statutory scheme, the benefits of any member scheme is subject to a government guarantee, so there should be no concern to members in relation to their pension payments.

“In relation to the actual assets of the fund you are quite right they have been affected by the fallout.

“Bonds have been most affected, we hold a reasonable proportion in UK government gilts, probably about 12% of the fund, and those [gilts] have sold off quite sharply as yields have risen.”

He added that the fund had actually benefitted from the ‘weakness of sterling’ because the MPF has a substantial proportion of assets overseas.

The MPF is now worth £11bn and also has significant investment in the local economy along with renewable energy.

MPF remains ‘in a good financial position’

Mr Wallach told the committee that although all pension funds had also been impacted by inflation, the MPF was still in a strong position.

He said: “As you’ve heard the fund is in a good financial position. There is short-term volatility and we wait to see what the long-term fallout is.”

Cllr Cleary told the committee that the situation would be discussed in detail over the next few weeks and that members would be updated ‘in due course’.

He told Liverpool World: “There is no reason for anyone who has paid into the Merseyside Pension Fund to be concerned, the fund is in a strong position.”