The pension fund victims of the BP oil spill
Updated on 09 July 2010
As BP still struggles to stem the flow of oil from its ruptured well head a mile below the surface in the Gulf of Mexico, Siobhan Kennedy reports that there are less obvious victims closer to home.
The attempts to plug the leak, which began after an explosion on board the Deepwater Horizon rig on April 20, have already cost BP more than £2bn. But the company's plunging share price is costing it far more than that on paper - with more than £55bn wiped off the company's market value.
All British pension funds have traditionally invested in BP - which has always been one of the biggest and most profitable stocks, not just in Britain, but in the world - so that drop in value is hitting them too.
Most of them invest around 8 per cent of their UK equity holdings in the company - around 1 per cent of their overall fund.
But Channel 4 News has learned that the West Yorkshire pension fund, which controls retirement benefits for 216,000 employees across Bradford, Leeds and Wakefield, has invested far more heavily in BP shares than the average British fund.
As a result, its 3.4 per cent stake has almost halved in value, from £274m before the well explosion to about £152m today.
For council workers like Iris Walter, these are worrying times. Though she doesn't blame the authority for investing in BP, she hopes that the company's share price will soon recover.
"If anybody mentioned BP I wouldn't have thought 'my pension', because you don't," she says. "When you see things on television that are that far away, you don't think 'that could hurt me'.
"So I don't know where it is going to go, I just hope I get my pension when I retire."
Tom McPhaill, head of pensions research at the financial advisory firm Hargreaves Lansdowne, said: "For a scheme of this size to hold 3.4 per cent of its total assets in one stock represents a considerable concentration of risk... I think in the light of what's happened they are going to re-evaluate how they manage their investments because what's happened has to be close to embarrassing for them."
And West Yorkshire is not alone. Other local authority pension funds including Derbyshire, Dyfed and Teeside, have invested about 3 per cent of their total funds, while South Yorkshire has invested about 2 per cent.
Watch Siobhan Kennedy's full report on Channel 4 News tonight at seven
