"What happens to my future pension if stock markets fall or rise"

"Who makes the decisions about the Investment Management of the Pension Fund"

"Who decides when to buy and sell stock"

"Do you take into consideration Ethical and Environmental issues"

"What is the size of the Fund"

"How is the Fund's investment performance monitored"

What happens to the contributions that I make every month?
Contributions received from Employees and Employers are invested on behalf of the Pension Fund by several fund managers in a range of equities, bonds, property and cash. The 'pot of money' is called the 'The Fund'.

Top of Page

What happens to my future pension if stock markets fall or rise?
The Local Government Pension Scheme is written under statute, (government legislation) with the current legislation guaranteeing that the members final pension is solely dependant on the members length of service and final salary at retirement date. Any fall or rise for that matter in world stock markets has no impact on individual member's pensions.

In order to take account of fluctuations in the stock market and issues such as members living longer a check is carried out every three years on the size of the 'The Fund'. The check is carried out by an independent pension expert called an actuary. The Actuary looks at how much money is going in, how investment returns are behaving, and how much is being paid out. If there's any risk of the pot running low - perhaps because of falls in world stock markets - the employers (not the members!) are required to pay more in to 'top it up'.

Top of Page

Who makes the decisions about the Investment Management of the Pension Fund?
The Pensions Panel of Aberdeen City Council has specific responsibility for the Investment Management of the Pension Fund. It is the job of the Committee to decide on the overall investment strategy for the fund and to appoint the Investment Managers to carry out that strategy. The Pensions Panel is made up of 4 elected members and is advised by an Independent Consultant and the City Chamberlain. Details of each party's responsibilities are given in the Statement of Investment Principles.

Top of Page

Who decides when to buy and sell stock?
Once the Pensions Panel appoint the Fund Managers to implement the Pension Fund's investment strategy, the Fund Manager will then operate under a management agreement where he has full discretion to buy and sell stocks. At the end of each month the Fund Manager reports to the Council on his investment activity during the period.

Top of Page

Do you take into consideration Ethical and Environmental issues?
The Local Government Pension Scheme Investment regulations require each Pension Fund to state 'the extent (if at all) to which social, environmental or ethical considerations are taken into account in the selection, retention and realisation of investments'

Rather than exclude stocks from the Pension Fund, the Aberdeen City Council Pension Fund has lead the way in 'Engagement' whereby as a major shareholder in the UK, Europe and North America it recognises that companies which perform well with regard to social and environmental issues have less exposure to reputational risks and can enhance earnings through cost savings and new business opportunities. Through F&C a strategy has been developed covering areas such as Labour Standards, Forestry, Bribery and Corruption, and Human Rights. More detail on this can be found in the section dedicated to Socially Responsible Investment.

Top of Page

What is the size of the Fund?
The value of the Fund is recalculated at the end of each financial year. The information is available as part of the accounts of Aberdeen City Council and as a separate document to be found on this website - see Annual Report and Accounts. As at 31 December 2005 the fund was valued at £1.5 billion.

Top of Page

How is the Fund's investment performance monitored?
The investment performance of the Fund and each of the Investment Managers is monitored on a quarterly basis. An independent performance measurement company reports to the Joint Investment Advisory Committee which also meet with the Fund Managers. The Joint Investment Advisory Committee consists of 4 elected members from Aberdeen City Council, 4 elected members from Aberdeenshire Council and 2 from Moray Council in addition to a representative of Scottish Water and the local colleges. Details of the role of the Joint Investment Advisory Committee can be found in the Statement of Investment Principles. The performance of the fund is reported on an annual basis in the Annual Report and Accounts.