Friday, January 18, 2013

Islington: Residential property to provide ethical, long-term returns - Investment - Pensions Week

I got a twitter message from the editor of Pensions Week , David Rowley referring to this video of him interviewing Chair of Islington Pension committee, Richard Greening, about their investment into residential property. They are putting around 2.5% of their £800 million fund into it and hope for a long term 4-5% return above inflation, as well as increasing housing supply. Greater Manchester Pension Fund is doing something similar.

For years I have been puzzled why Council Pensions funds haven't invested in residential property? I never got a satisfactory answer from advisers or fund managers why this is so. While these schemes are for the private rented sector, I'll be obviously interested in social housing as well.

There are of course risks and concerns that many Council pension funds are too small to invest in such assets. Also the beneficiaries representatives need to be involved in the decision making since it is their pension futures that will be at risk. 


Anonymous said...

I have never heard such a load of b******cks.

Firstly, you describe this pension as "ethical, long term returns...".

Islington is one of those boroughs, which is going to boot out its own residents because of the benefit cap. How is Islington's pension fund going to help them?. Why don't Labour put their money where their mouth is and build homes in their own borough and rent them at social rents.

Secondly, a return of 4-5% above inflation is extremely agressive. It is based on the assumtion that our inflated house prices will be going up.

Only Labour would come up with such a ridiculous projection.

The pension funds are going to bleed their tenants to death. People are not getting inflation busting pay rises.

George Obsborne annouced housing benefit rents would be restricted to 1% rise. The Tory's are telling the private rental sector you are capped at 1% (which in real terms is a rent reduction).

On the other hand, Islington Labour pension wants to rent at "inflation + 5%" rents rises.

So you don't want to rent to people on benefits....

In your own blog, you admited you support rent controls. They say "charity begins at home".

The problem with you socialists, is you say one thing (when it comes to other peoples money), but when it comes to your own money (i.e. pensions) it brings out the worst of capitilism.

John Gray said...

Hi anon

The benefit cap is government policy not the Council. It is the government that wants to get rid of all poor people out of London. Apart from its servants of course.

If you increase the supply of private rented housing you add to the pool of homes available?

Anyway it’s not the Councils or "labour’s" pension - it is the beneficiaries.

4-5% return in the long term is not particular aggressive? Less than equity trend. With sector you should get inflation linked income and capital appreciation.

Pension funds are for the long term. 50 year plus projected liabilities. I don't think the Tories will in power past the next general election.

I have always argued for rent controls that are fair and reasonable to tenants and landlords. In other Countries like Socialist Switzerland, Revolutionary Germany and Red USA, pension funds manage to invest successfully in residential properties despite having rent controls.

BTW I never realised either that Tory Councillor Sir Merrick Cockell, Leader of RBKC and LGA had defected to Labour? He is in favour of such schemes as are Tory controlled boroughs up and down the country.

The problem with conservatives (small c) such as yourself anon is that you are so blinkered and ignorant that you dismiss anything out of your comfort zone as some sort of socialist plot.

When actually although there are problems this idea makes sense(except fully paid up members of the Stupid Party?).

John Gray said...

and another thing. Islington has invested 2.5% of its fund while Sir Merrick would invest up to 15% of the LGPS, while that well known communist Eric Pickles would have up to 30% in similar vehicles!

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