TPA reveals £54 billion black hole in council pension schemes
- Published on Friday, 13 April 2012 09:18
- Posted by Scott Buckler
The TaxPayers’ Alliance (TPA) today reveals that councils across the UK had a combined pension deficit of £54 billion in 2010-11. The assets of all 101 local authority pension funds in the UK are dwarfed by their liabilities, creating a deficit which taxpayers are ultimately liable for
The Local Government Pension Scheme (LGPS) is much more generous than most private sector pensions and is in urgent need of reform. Previous TPA research has found that the equivalent of £1 in every £5 of Council Tax was spent on employer contributions to the LGPS.
The key findings of this research are:
• Local Authorities across the UK had a combined pension deficit of £54 billion in 2010-11. This is a fall from £91 billion in 2009-10, which was a particularly bad year for local government pension funds. But, even after a recovery, the latest combined deficit has still increased from £51 billion in 2008-09.
• Birmingham City Council had a deficit of £1.3 billion, the biggest deficit in 2010-11 and the only council with a deficit of more than £1 billion. This is £1,292 per head of Birmingham’s population.
• 14 local authorities had a deficit over £500 million in 2010-11, and 165 local authorities had deficits in excess of £100 million.
• The local authority in Scotland with the largest deficit in 2010-11 was Glasgow City Council with £625 million. This is £1,054 per head of Glasgow’s population.
• But the highest deficit per head of the local population in Scotland is Dundee City Council at £1,565 each.
• The local authority in Wales with the largest deficit in 2010-11 was Cardiff City Council with £494 million. This is £1,450 per head of Cardiff’s population.
• But the highest deficit per head of the local population in Wales – and the entire UK – is Merthyr Tydfil Council, with a pension deficit of £2,268 per head.
• The local authority in Northern Ireland with the largest deficit in 2010-11 was Belfast City Council with £74 million. This is £274 per head of Belfast’s population, the highest deficit per head of population.
• Across London’s 32 Borough Councils plus the City of London and the Greater London Authority the total combined deficit was over £9 billion. This is one sixth of the overall deficit across all UK schemes.
• The highest deficit per head of population in England is in Brent Council, with £2,267 per head, followed by Gateshead Council with £2,040.
Matthew Sinclair, Director of the TaxPayers' Alliance, said:
"The deficit in the Local Government Pension Scheme remains a ticking time bomb that’s 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. 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."