Local govt pension deficit ‘up to £100bn’
By politics.co.uk staff
Pension schemes covering four million people may have seen a huge rise in the shortfall between assets and liabilities, according to a study.
Independent consultant John Ralfe claimed that the deficit in the local government pension scheme had sky-rocketed to £100 billion, up from £42 billion in 2007.
Mr Ralfe’s research suggests that liabilities in the scheme have soared to £232 billion due to, for example, increased benefits for local government staff, while the value of assets has only gone up by eight per cent in the last three years to £132 billion.
But public sector organisations, including the Chartered Institute of Punlic Finance and Accounting (CIPFA) have criticised the accounting method used to produce the liability figure as an exaggeration of the official figure, due to be reported next year.
Pension reform is a key plank of the coalition’s economic policy, it has tasked Labour peer Lord Hutton with bringing about a new system for public sector schemes that is sustainable.
In his initial findings, the pensions tsar suggested individual pension contributions would inevitably have to go up to plug mounting shortfalls.
Lord Hutton also recommended an end to generous final salary pension schemes – to be replaced with payments based on average lifetime earnings.
The local government pension scheme is split into over 80 different funds, with 1.7 million workers paying for four million total members.
