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On the verge of a possible global recession, local authorities are being given mixed advice on how best to manage their pension funds. The American sub-prime saga prompted senior council financial figures and independent investment advisers to closely monitor pension funds and their investments. One independent investment adviser told The MJ many councils were now taking steps to ensure their pension fund investments were more risk-averse, and were being advised to take on additional asset classes and consider how else they could spread their investments. ‘They may also consider global tactical asset allocation (GTAA),' he said. ‘But, whatever they are considering, they are being very cautious and not taking any extra risks. ‘More attention is being paid to global investment and fund managers are now more aware of overseas investment. They are seeking to invest globally and spread the risk. Fund managers themselves are also coming under the spotlight, and local authorities are paying much more attention to their reports and are closely monitoring performance.' But another independent adviser told The MJ, although everybody was bound to be ‘slightly anxious', local authorities could still take a few risks. ‘Local authority pension funds are different from any other pension scheme,' he explained. ‘Councils won't cease to exist, so can plan financially over a very long term. Local government pension schemes are relatively immature, so local authorities can take a slightly higher risk approach to investments.' He said it was clear to see that in recent years, the UK proportion of pension fund investments had reduced considerably, and pension funds had diversified into various asset classes.

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FINANCE

Mixed pensions advice for councils as recession looms

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