Kent County Council has been unable to retrieve £263million of pension money invested via a fund manager after his company suspended trading.
The move by Neil Woodford, of Woodford Investment Management, came after KCC was the latest in a line of investors preparing to pull its cash.
The Woodford Equity Income Fund is reported to have plunged from a value of over £10bn in 2017 to just £3,7billion, according to the Financial Times.
KCC says the investment with Woodford initially performed reasonably well, reaching a peak value in January 2017 of £317million. But since then, performance has deteriorated and in March 2019, the authority’s Superannuation Fund Committee resolved to reconsider the investment at its meeting on June 21.
However, last month it was revealed that the overall value of the Equity Fund (KCC and other investors holdings) had reduced by a further £560million due to redemptions and further weak performance.
Kent County Council made the decision to remove funds immediately and steps were taken to make the necessary arrangements to redeem the investment on Monday, June 3.
But the same day the freeze on the equity income fund was announced.
A Kent County Council spokesman said: “The announcement on Monday that trading in the investment fund was suspended was not anticipated. KCC is disappointed that, as a major investor in the fund, we did not receive this prior notification.
“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.”
The investment with Woodford Equity was made in two tranches of £200m in 2014 and a further £60m in 2016.
The spokesman added: “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.
“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.”
The pension fund is managed on behalf of the council’s 65,000 current and ex-employees eligible for pension benefits, as well as for employees and ex-employees of affiliated bodies such as district councils and former maintained schools.It is understood thousands of individuals and institutional investors are affected by the suspension.
County Councillor Barry Lewis, who represents Margate at the authority, said: “I am very worried that KCC is involved with this company which is refusing to hand back our money. It is casino capitalism at its worst and KCC should not be gambling with our money.”