PENSION funds held by Dorset County Council are slightly under-performing – but earning more interest than most are able to achieve.

Figures before the council’s pension fund committee next week (Sept 17th) show that the fund grew from £2,854million in April to £2,953million at June 30th and achieved a return of 3.5 per cent during the first three months of the financial year – compared to the 3.8 per cent benchmark figure.

Councillors will be told: “The quarter saw very large gains in UK and overseas developed equities markets, reversing the losses in the previous quarter. These gains in developed markets were partially offset by large losses in emerging markets, driven by the appreciation of the US dollar against local currencies.”

Over the longer term, the fund returned an annualised 8.7% over the three years to March 2018, ahead of the benchmark return of 8.1%, and 9.2% against the benchmark of 8.4% over the five years to the end of March 2018.

Overall the fund is considered to be well managed and maintained, according to auditors, but there are concerns that changes in the global market and currencies could eventually lead to a call for increased contributions.

But for the moment the report notes a positive immediate outlook: “The Fund currently receives more money in contributions and investment income than it pays out as pensions and retirement grants. It was estimated that there would be a surplus of income over expenditure from these cash flows of approximately £10M to £15M in the 2018/19 financial year,” said Richard Bates, the pension fund administrator.

The fund has joined nine other funds in the South West to form the Brunel Pension Partnership, one of eight such pools across England and Wales – which the end of March 2018 had a combined value of just over £29billion. Dorset’s assets account for about 10 per cent of that.

Said pension fund chairman Bournemouth councillor John Beesley in his preface to the annual statement: “There is no doubt that markets will witness more volatility as Brexit negotiations continue. However, I am sure that the Fund’s revised investment strategy is well positioned to cope with the inevitable movements across investment markets in the future. I know that we need to ensure the Fund remains flexible in its approach to continue to be successful.”