Public sector retirement savers have seen some of their money go up in smoke as share prices in leading mining companies have crashed.
Campaigners claim millions of pounds has been wiped off the value of local government pensions as the value of the companies has collapsed.
And they expect even more money will be lost if the Local Government Pension Scheme (LGPS) does not sell off investments in coal, gas and oil companies.
The LGPS manages pensions for almost 5 million local authority workers, including many low paid staff.
Campaigners Platform reckon each worker has lost hundreds of pounds as the value of fossil fuel stocks have dived over the past 18 months, but the worst may yet come.
Councils most at risk
Analysts from independent organisations such as the World Bank, G20 developed country governments and City institutions take the view fossil fuel reserves should stay untapped to halt global warming and that countries should look for alternative energy sources that are less damaging to the environment.
The Platform report claims public sector pensions have lost £683 million due the fossil fuel crisis – with Greater Manchester’s council losing the most money of £148 million.
Other councils have smaller losses, but the figures make up a larger percentage of the pension fund.
Teeside’s council has suffered the worst loss of 1.5% of the total value of the pension fund, seeing £46.9 million go, while Merton Council, London, lost 1.4% of fund value (£6.8 million) and is believed to have the largest fossil fuel investment exposure.
Bank of England governor Mark Carney has also voiced concerns that the balance sheet values of fossil fuel companies are likely to see massive losses.
“Evidence suggests climate change policy will affect fossil fuel company balance sheets and share prices,” said a spokesman for Platform.
“If these councils lose money on investments, the cost is transferred to the public.”
Platform accuses councils of paying out large fees for investment advice when they should have sold fossil fuel holdings and reinvested the cash in other markets.
“If pension fund managers and trustees make the wrong decisions, they could be held to account by members who have lost money,” said lawyer Natalie Smith.