Exclusive: Millions wiped off Avon Pension Fund fossil fuel investments
Major toll on pension fund.
Illustration: Yeyo Riancho
The Cable can reveal that millions of pounds have been wiped off the value of Avon Pension Fund’s investments in the Oil and Gas sector. The Fund administers investments for almost 90,000 local government employees in the Avon area.
Despite a significant increase in the number of shares invested in Oil and Gas corporations, the worth of these shares has dramatically diminished between June and December 2015. The value of oil has plummeted since 2014 , meaning that investors are taking the hit. Whilst those currently enrolled in the scheme are guaranteed a static income, the Fund’s investment performance will affect those who are yet to join.
Like for like comparisons of the Fund’s seven direct investments in the sector (see below) show that every single company’s worth has decreased from June to December 2015. The result is huge losses for the pension fund. Shares in the Texas based Cabot Oil have taken a 40% drop, meaning that the Fund’s 126,577.00 shares are worth £1 million less in December 2015 than in June 2015. Losses of between £300,000 and £560,000 have been suffered in 3 other companies where the number of shares has remained the same but the value of each share has decreased by up to 13%.
The only investment that saw an overall gain was in Royal Dutch Shell. However this is explained by the Fund buying over 200,000 extra shares during the period, bringing the total to 564,059. By December 2015 every single of these was worth £2 less than in June.
Unfortunately for the Fund, the investments will have taken serious further damage in January and February 2016, with oil reaching a 13 year low in mid-February.
This evidence may make for a “told you so” moment for Bristol’s fossil fuel divestment movement. The Fossil Free Bristol campaign has been lobbying the Avon Pension Fund to review its investment decisions, arguing that divesting from fossil fuels is both an ethical and financial imperative, as fossil fuel markets are so volatile. Campaigner and member of the Fund’s pension scheme Richard Lawrence told the Cable “the pension savings of thousands of local people are at risk. We hope that the APF make the sensible decision to divest from fossil fuels before they lose any more savers’ money”.
Avon Pension Fund did not comment despite repeated requests for clarification on how investment decisions would be made to protect future pensioners.
The crash in oil prices is being attributed to several things. Among these are an overall slowdown in the global economy, an increase in Shale gas exploration in the USA and the re-entry into the market of Iranian oil following the lifting of trade sanctions. The result has been an overall decline in demand and an increase in supply of oil, meaning that prices have seen historic drops with further warnings issued for 2016.
The Cable will continue to monitor the developments on this issue and seek comment and accountability from the Fund.
| Company | December Shares | December Value £ | June Shares | June Value £ | Decrease in share value |
£ change in investment June – December | Change in Shares |
| BG GROUP PLC | 748430 | £7371287 | 728660 | £7716509 | 7.00% | £-345222 | 19,770.00 |
| BG GROUP PLC ORD GBP0.10 | 510,805.00 | £5,030,918 | 510805 | £5409425 | 7.00% | £-378,507 | 0.00 |
| CABOT OIL & GAS CORP | 126,577.00 | £1,520,058 | 126577 | £2538462 | 40.12% | £-1,018,404 | 0.00 |
| CIMAREX ENERGY CO | 37,748.00 | £2,288,340 | 37748 | £2647664 | 13.57% | £-359,325 | 0.00 |
| ROYAL DUTCH SHELL PLC | 564059 | £8700610 | 347734 | £6210529 | 13.63% | £2490081 | 216,325 |
| SCHLUMBERGER LTD | 75,042.00 | £3,549,717 | 75042 | £4111158 | 13.66% | -561,441.10 | 0.00 |
| STATOIL ASA | 304,768.00 | £2,889,758 | 348860 | £3950087 | 16.26% | -1,060,328.75 | -44,092 |
APF Investment Portfolio June 2015.
APF Investment Portfolio December 2015.
