£250 million plunge for pension fund

Another classic quote from Parkinson

"Deputy Parkinson says that they followed the advice they were given at the time but that with hindsight, the exposure in equities was a mistake"

So whats the gfsc going to do about the advice given ? They have spent 5 years going around small brokers enforcing draconian measures none of which is beneficial to the broker or the client reagrding "best advice" "kyc" so here we have a example on their own doorstep so to speak a huge loss for the states of guernsey pension fund.

Who advised ? How Much Commision did they earn ? And what are the gfsc going to do regarding what appears to be BAD ADVICE ?

I must have missed the part where it is practice to look into a crystal ball to get investment advice. It may have slipped Chok's notice but there is a world wide recession where unprecedented losses have occured that were not foreseen. So I doubt that we can say it was "bad advice" just an unfortunate set of circumstances. If the States had invested in very conservative cash funds when profits were being made in stocks they would have been criticised, when they follow market trend they are criticised. KYC advice is also different to investment advice so that is a poor example. You pay your money you take your chance

So in your opinion its ok to be advised to lose 250 million ?

It may have been prudent to have a stop loss set or is that to much work lol

The recession wasnt forseen? Hmmmmmm it seems to have been a topic on almost every News thread for the last 18 months.

Isnt kyc (know your client) a procedure to identifiy your client and their requirements and financial needs,risk assesment etc etc ?


Can you give me a example were in your opinion a ifa would be responsible for "bad advice "

My point is not the merits of is it good or not to lose that amount but whether the advice was, as you put it, "Bad advice".
Perhaps they did have a stop loss set. There are a lot of facts missing that need to be identified before you can say it was bad advice. We have no idea how much was invested, what the portfolio spread was. The adviser may well have completed a risk profile but again we do not know what the profile looks like, dealing with superann' I know what it should look like but the I do not know what the States appetite for risk is/was.
Know your client normally refers to AML, from my experience the IFA has to obtain KYC but has other duties under advice to a client.
Bad advice, IFA "put all your eggs in one basket" Client "the markets falling what should I do?" IFA "sit it out"

Under the kyc requirements the completion of a fact find has a section asking for the clients attitude to risk,so your initial comments that kyc and investment advice are not connected isnt to accurate,i agree we dont know what the risk assesment was,but being a public purse my question is should they be taking this type of risk ? With regards to a advisor if i was to have one i would hope they were aware of the climate of the markets and take appropriate action.

I agree with your comments bad advice "sit it out " this is a typical response froma ifa whos main concerns are getting the client to invest initially so he can earn his up front commision then having a annual review so he can sell some more,the in between bit is were most ifas are sadly lacking.

Whilst we dont know all the facts in this case it is a considerable loss of public money about that there is no doubt.

What should also be remembered is that the loss is a paper loss and is not realised unless the States sold all their assets then the loss is crystalised. The fund that is managed is huge and I wonder what the 250m represents in a % of the total fund. If it is part of the super' fund then the investment is long term and should be viewed as such and the ups and downs should even out. Long term I believe history shows that shares are still the best investment and out perform leaving money in the bank providing you are using a balanced portfolio and do not have all your eggs in one basket for instance solely tech' shares.

Is there no public information on the fund size ?

I think its fair to say that in June we were well into the downturn in financial markets and at that time we should have been thinking about keeping as much of the cash as possible on deposit but not knowing what the fund rules are it is difficult to comment.

I will say that there is no point in selling the stocks now as it is only a paper loss and in time these stocks will recover. But I think a lesson has been learnt and perhaps some review of how the fund is managed may be useful, if not just to bring it into the public eye.

THE States employees’ pension pot has plummeted in value by £254.9m. in the last 10 months. Stock market turmoil has seen the value of the superannuation fund, which at the end of December stood at £896.4m., fall to £641.5m. at the beginning of this week. Treasury minister Charles Parkinson (pictured) revealed the figures after being questioned in the House yesterday by Deputy David De Lisle. Earlier this month Treasury had refused to release the figures after a request by the Guernsey Press. It said it would do so in its quarterly report. Deputy Parkinson said that advice had been sought in June as to whether the fund’s exposure to equities should be reduced, but it was not thought then that it was a good time to do so.

Deputy calls for pension switch

A Guernsey deputy is calling for the pension fund for former States employees to be pulled from the stock market. The fund lost £90m in only seven months, the States was told. Treasury and Resources Minister Charles Parkinson has reassured pensioners that the loss will not affect individual pension rights. But Deputy David de Lisle says the money would be better invested in a high interest account.

Seems he was right

David was right but why didn't he give that advice BEFORE the melt down, hindsight is the best investment knowledge that there is but unfortunately it always, without exception comes after the event. As commonsense guern states there is no benefit in selling now. This is a super fund and as such will be spread and is in for the long term investment. As I mentioned before there is historical data that shows the stock market out performs a fixed deposit over long term even with these lows. It may take 5 years but the market and the investment will recover. Interesting to see that there is more info than at the beginning of this thread. The advice does not seem to be bad. In June, sell a long term investment and sustain an actual loss or hold on for the long term which is what was intended at the beginning of the investment and then regain your paper loss. Storm in a tea cup initiated by those in the states that have no investment knowledge.

couldn't agree with you more plimmerton.

Is it public knowledge when he first asked about the possible risk in equities the report claims the fund had lost 90 million pounds it has now lost 250 million albeit a paper loss it is a significant loss and i think we all agree a 90 million loss is much better.

The fund has made a significant loss from 896 m to 641 m after advice given by people WHO DO HAVE INVESTMENT KNOWLEDGE deputy De Lisle is entitled to his opinion and in this instance he appears to be right.

We all know its now to late to sell but the hole point is SHOULD A PUBLIC FUND BE EXPOSED TO SUCH RISK ? Thats not hindsight its common sense.

I also find Mr Parkinsons quote absurd "Treasury and Resources Minister Charles Parkinson has reassured pensioners that the loss will not affect individual pension rights. " if the fund continues to fall and it may well do in the current climate surely this would have a affect on the states abilty to fund future pensions at the current levels.

Does anyone know were we can see a track record of the fund say in the last ten years and how much commisions have been paid to the advisors ? And what the preformance has been like ?

Has the head of finace been removed ? Seems to be a vacany


The Head of Finance is the most senior accounting role for Guernsey's Social Security Department, part of the States of Guernsey. The postholder will have responsibility for all activities of the Finance Section within the Department, which has income and expenditure in excess of £150M. The postholder will also be responsible for controlling the investments of the funds worth some £600M.