Member News
The Local Government Pensions Scheme (LGPS) could represent a "crisis for local government although not an immediate one", a report suggested today.
The Audit Commission revealed recent investment into "anticipated returns" had proved unsuccessful, meaning the funds only cover three-quarters of future liabilities.
The report comes as the government announces its plans to scrap the default retirement age in the UK from October 2011.
The study provided solutions to tackle the problems faced by local authorities now the deficit has been prolonged, and to overcome the obstacle of a background of increasing costs.
The LGPS has 1.7 million active members and 1.1 million members with deferred pensions. A further 1.1 million people are receiving pensions.
Proposals from the commission to counter the shortfall included negotiating the significant obstacle of a background of costs increasing, raising the retirement age whist reducing accrual or accountancy rates and to give more discretion to local pension funds to adjust benefit structures.
The report will be submitted to Lord Hutton's commission on public sector pensions.
Eugene Sullivan, chief executive of the Audit Commission said: "Media reports about generous public sector pensions distort the picture.
"One of the key facts is the high proportion of part-time and low paid members in the LGPS. Around half of pensions in payment are below £3,000 a year.
"The scheme can't continue as it is. Unfunded liabilities are being deferred, and this is storing up problems for the future."
Communitites secretary Eric Pickles said: "Town hall pensions are now costing hundreds of pounds a year to every household.
"A massive take of everyone's council tax bill is going on pension costs, rather than emptying bins weekly or cleaning the streets.
"Local taxpayers simply cannot afford to foot an ever-growing bill for town hall pensions, especially for highly paid senior officers and town hall chief executives."
Dods Parliamentary Communications Ltd
r griffiths
29th Jul 2010 at 6:27 pm