Bank gambled pension fund without consent
BANKERS have been gambling with too much of the council workers pension fund without the consent of Town Hall bosses. Audit officers found that stock lending on the council s pension fund exceeded the authorised limit without prior approval or discussion
BANKERS have been gambling with too much of the council workers' pension fund without the consent of Town Hall bosses.
Audit officers found that stock lending on the council's pension fund exceeded the authorised limit without prior approval or discussion with the Pension Committee.
Auditors said this risky behaviour could leave the authority "overly exposed to credit risks" and that it could suffer "significant losses".
According to the custodian agreement the council has with State Street Bank, only 25 per cent of their �120million portfolio can be lent.
But in September 2008, 29 per cent of the total amount, �35.5million, was lent without approval from the Pension Committee.
The committee consists of councillors, including executive member for internal audit, Graham Bramley.
- 1 Man taken to hospital after fight reported on Heathway in Dagenham
- 2 Truck towing stolen Rolls Royce SUV crashes before dramatic foot chase
- 3 Man charged after staff assault at Barking Asda
- 4 Man in critical condition after staff assault at Barking Asda
- 5 Footballer convicted of hate crime after homophobic abuse of opponent
- 6 Woman taken to hospital after Dagenham Heathway station incident
- 7 One man injured after A13 crash involving car, van and lorry
- 8 Man denies charges after drugs raids as east London duo await trial
- 9 Woman hospitalised after Dagenham garden bonfire gets out of control
- 10 How many Covid patients are in hospital in east London this week?
Auditors also found that, though the stock lending value was monitored by State Street Bank, the breach was not reported to the council.
The agreement has now been reinstated and any lending over 25 per cent must now be approved by the Pension Committee.
The council workers pension fund saw another huge drop in value this year with the total net deficit reaching �175 million.
Accounts from 2007/8 show a deficit of �102 million - meaning a decrease in pension value of �72million over the last
Much of this has been blamed on the "economic downturn" and, overall, the council has seen a �163million decline in its net worth.
Barking & Dagenham's assets are now considered at bid price rather than the mid-market "fair value".
This has seen as massive actuarial loss in the pension fund of �65million whereas last year a gain of �22million was made.
However, the net liability is much more, nearly �175million, as the council needs to pay out millions of pounds to retired workers.
This represents more than 15 per cent of the authority's entire value.
But council chiefs say they are committed to paying out pensions and that the deficit will be recouped through increased staff contributions to the fund.