Pension investment in tobacco ‘reviewed’ at Suffolk County Council
Saturday, July 21, 2012
9:14 AM
SUFFOLK County Council’s pension investment in tobacco firms could come under fresh scrutiny.
About £40 million of the £1.5 billion Suffolk pension fund is invested in tobacco firms – when this was revealed earlier this year the council said it had no plans to change its investment policy.
However it has now emerged that the investment policy could be reviewed as concern about the investment rises.
This has been fuelled by the transfer of staff from the NHS to the county council – especially health education staff.
The NHS is one of a number of government pension schemes that has a policy of not investing in tobacco companies because this is seen as incompatible with their basic function.
It is understood that many of the NHS staff who have been transferred to the county are unhappy about their pensions being invested in tobacco companies.
Answering a question about the pension fund’s tobacco investment this week, councillor with responsibility for health Colin Noble said the issue was likely to be kept under review.
Speaking later he said: “It is very important that the pension fund is managed in a very conservative way to bring the greatest return for the members who rely on it for their pensions.
“The managers need to be given as free a hand to manage it in the best possible way, but there is an issue here and that is something that will be kept under review.”
Senior members of the administration at Endeavour House are understood to have been surprised at the level of investment in tobacco companies.
The county’s pension committee handles the pensions for all Suffolk’s district and borough council employees and many other public sector employees.
Its chairman, Peter Bellfield, said the level of investment in tobacco companies was discussed periodically – but the decision had always been taken to give the fund managers a free hand in what they could invest in.
He said: “It is important to get the best return. If you want to stop investing in tobacco where do you stop? Do you stop investing in armaments companies? In food companies? In oil companies? Then you find your options are limited and you may be unable to achieve the kind of returns you need.”
Any member of the pensions committee could ask for the issue to be discussed at a meeting – the next is scheduled to be held in September.
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3 comments
This carping about anything smoking-related is getting dull. Tobacco is a legal product that people choose to use. If you hate it that much, then just come right out and try to ban the stuff completely. Fully a quarter of our Council Tax money goes towards council staff pensions - if some staff don't like where some of their pension money comes from, then they should stand by their principles and accept a smaller pension - rather than presumably expecting the taxpayer to make up any shortfall. 'Ethical' investments are nothing of the sort - just low-yielding investments beloved by our left-wing friends and the causes they continually espouse.
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SEAN SMITH
Saturday, July 21, 2012
Just to add that it is worth noting that SCC has £36.6m invested directly in tobacco companies, about 2% of the value of the whole pension fund. The return on that investment in the most recent full year was just under £1.5m, a return of 4%. I leave others to decide whether a 4% return on investment (ROI) is sufficient recompense for over 1100 Suffolk residents dying from smoking each year. That's a rather different ROI of £1344 per death.
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Stewart Brock
Saturday, July 21, 2012
The committee chairman asks: " If you want to stop investing in tobacco where do you stop? Do you stop investing in armaments companies? In food companies? In oil companies? Then you find your options are limited and you may be unable to achieve the kind of returns you need.” The answer to this oft posed question is actually very straightforward, and New Zealand showed the way. The UN Framework Convention on Tobacco Control has very clear guidance that all branches of government should not invest in tobacco companies. One of the key reasons given by the New Zealand Fund was that to continue investing in tobacco companies would not be compatible with the country's Treaty obligations. For the same reason they also do not invest in cluster bomb companies, as those munitions are also banned by international treaty. So, there is not a long and slippery slope from tobacco to alcohol, food, and general armaments. Pension fund committees should simply instruct their fund managers not to invest in companies that are incompatible with UK international treaty obligations. It is also worth repeating that tobacco is the only consumer product that when used as intended by the manufacturer kills half its long term users. It is a unique product category, killing 1116 Suffolk residents each year.
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Stewart Brock
Saturday, July 21, 2012