£15m pension holeattributed to DCC

THE pension deficit attributed to Derry City Council for a common NI fund, which is invested in nuclear weapons, tobacco, alcohol, bookies, oil and US arms firms including Raytheon, now stands at £15m - the second highest deficit in Northern Ireland.

Environment Minsiter Alex Attwood said the attribution of the £14.981m deficit to the local authority in relation to the Northern Ireland Local Government Officers’ Superannuation Committee (NILGOSC) pension fund was made for the purposes of Derry City Council’s annual accounts.

The only council with a higher deficit was £71.939m. The deficit in Limavady was £3.419m and the deficit in Strabane was £3.106m.

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Mr Attwood said the deficit breakdown is calculated for the purposes of the councils’ annual accounts and that in making the estiamte it is assumed that all assets are invested in bonds and that the deficits are fairly large because “bonds currently have very low returns.”

But the Minister explained that “the total liabilities of all 202 employers participating in the Scheme are pooled on common basis. It is the total pooled liability of the fund that will determine the nature and scale of action taken to address that liability at the next triennial valuation in 2013.”

Equally, the fund valuation reflects the fact that the majority of the investments are in equities.

Last year the Sentinel revealed the nature of the equities in which Londonderry’s pension contributions are being invested.

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The paper showed many local council workers, alongside staff at ILEX, WELB, NIHE, Magee, City of Derry Airport, NWRC, Ulsterbus and some local schools are contributing to the pension fund which has been invested in a diverse portfolio of global shares, amongst them recession proof staples such as the military industrial complex, cigarettes, alcohol and gambling.

The NI workers’ pension pot has also been poured into Honeywell International (£808,326.52; 21,700 shares) which tests, develops and stockpiles nuclear bombs at the Pantex Plant in Texas, for the US National Nuclear Security Administration (NNSA); and Lockheed Martin (£536,551.98; 10,700 shares) which makes submarine launched ballistic missiles amongst other military hardware products.

Two of the world’s largest tobacco companies and several major diamond mining firms have also been invested in by NILGOSC pension fund managers.

In fact the investment of the pension contributions in arms manufacturers is actually quite low in comparison to that vested in multinational tobacco giants. Overall, NILGO have over £40m invested in British American Tobacco - the owner of Dunhill, Kent, Lucky Strike and Pall Mall; and over £10m invested in the Imperial Tobacco Group - owner of Drum, Gitanes, Golden Virginia and Lambert and Butler.

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Other major investments include £58.5m in the BG Group (British Gas outside the UK); £45.9m and £33.4m respectively in diamond, metal and coal miners Rio Tinto and BHP Billiton; £30.7m and £28.3m respectively in the Standard Chartered and HSBC banks; and £23.3m in oil company Royal Dutch Shell.

Money has also been poured into bookmakers William Hill (£5.4m) and brewer Carlsberg (£3.9m).

Mr Attwood stated: “Councils participate in the Local Government Pension Scheme (Northern Ireland) (LGPS (NI)). A total of 202 employers participate in the LGPS (NI).

“Contributions from all active members and employers are paid into the common pension fund maintained by the Northern Ireland Local Government Officers’ Superannuation Committee (NILGOSC).

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“The total assets and liabilities of this fund are valued every three years. The valuation is conducted by an actuary appointed by NILGOSC (the scheme actuary).

“It is a snapshot in time of the future liabilities of the LGPS (NI). At the last valuation at March 31 2010, the fund had assets totalling £3.4bn and liabilities totalling £4.3bn, giving a funding level of 82 per cent.

“NILGOSC is operating a 20 year plan to return to full funding. Employers who are members of the Scheme may request the scheme actuary to provide them with the information about pension liabilities required for their individual annual accounts.”