UK - Warwickshire County Council pension fund has been forced to take a £5m ($8m) loan to fill a cash shortfall after austerity measures put a strain on its cash flow.
The six-month loan - due to repaid at a rate of 1% - made up a shortfall at the end of March to cover member payments as job cuts and early retirement initiatives by employers hit by the tough economic climate dented the £1bn fund's cash flow.
Warwickshire County Council treasury and pensions group manager Phil Triggs said: "The pension fund's investment strategy is to keep cash levels to a minimum to achieve maximum commitment to long term investments.
"Austerity measures have led to an unforeseen call on the scheme as the pension fund's scheduled and admitted bodies implemented redundancy and early retirement programmes.
"The short term loan made up a shortfall at 31 March 2011 and is a temporary measure with the cash flow still positive on the fund."
Officers for the scheme are now undertaking analysis of the current and likely future fund cash flows that have changed as a result of increased outflows.
It was mooted the fund may need to cash in some of its investments to pay the loan back, however it said it was unlikely.
"The situation will be monitored with pooled funds immediately available if required. It is, however, envisaged that the positive cash flow will result in this option not being taken up," Triggs added.
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