Council Pension Schemes Have '£54bn Financial Black Hole'

The Huffington Post UK  |  By Posted: 12/04/2012 14:43 Updated: 13/04/2012 08:44

Pensions
There is a £54bn gap in local government pensions, it has emerged.

Local councils across the UK have a combined deficit of £54bn in their pension schemes, it has emerged.

The assets of all 101 local authority pension funds in the UK are dwarfed by their liabilities, according to a report by the TPA.

The deficit in the Local Government Pension Scheme (LGPS) has soared by £3bn from its total in 2008-2009.

According to research, Birmingham City Council has the largest deficit, of £1.3bn.

According to the TPA 14 local authorities have been found to have a deficit of over £500m, with 165 others bearing deficits in excess of £100m.

Matthew Sinclair, the director of the TaxPayers' Alliance, said, the deficit in the Local Government Pension Scheme was a "ticking time bomb" that was being left for future generations of taxpayers to deal with.

"With an ageing population and a crisis in the public finances, generous final salary schemes like the LGPS are inflexible and too expensive, and need urgent reform," he said.

"Councils should not take false comfort in the improvement in the stock market. Their pension liabilities continue to far outweigh their assets and the situation remains worse than two years ago."

However, LGA Workforce Board Chairman Sir Steve Bullock said the TPA research was misleading.

“Presenting a one-day snapshot is a spurious way of gauging the viability of a pension scheme and this year-old figure has no relevance to the actual cost of local government pensions," he said.

"Councils have taken steps to ensure the schemes, which are significantly funded by contributions from employees, are affordable for taxpayers, fair to workers and viable in the long-term.

“The fact the nominal deficit fell by £37 billion in just a year shows that we are getting it right and that the supposed ticking time bomb is already being defused. We will continue to work to ensure the ongoing viability of local government pensions.”

FOLLOW UK POLITICS