Kent Pension Fund - Woodford Equity Income Fund statement
A statement about the KCC Pension Fund
Kent County Council’s pension fund holds an investment in the Woodford Equity Income Fund valued at £263 million at the end of April.
The Superannuation Fund Committee agreed unanimously to redeem this investment on Friday 31 May, however, in the interim the fund suspended trading, which means that KCC – one of its biggest investors - and other investors cannot redeem their funds.
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, or on the pension benefits for individual scheme members.
This represents around 4% of the council’s total investments of £6.4billion from its pension fund. Overall these investments have performed well with the total value increasing by 47% since December 2014. The pension fund is invested in a wide portfolio of instruments in order to secure a good rate of return and to mitigate against the risk of losses on any individual investments.
KCC’s investment with Woodford initially performed reasonably well, reaching a peak value in January 2017 of £317million. Since then, performance has deteriorated and in March 2019, the authority’s Superannuation Fund Committee resolved to reconsider the investment at its meeting on 21 June.
The Committee had an intervening meeting scheduled for 31 May 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 the 31 May meeting the overall value of the Equity Fund (KCC and other investors holdings) 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 21 June. Consequently, steps were taken to make the necessary arrangements to redeem the investment on Monday 3 June.
The announcement on Monday 3 June that trading in the investment fund was suspended was not anticipated.
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.