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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."
Article Comments
The comments from the audit commission are clear and factual and cannot be argued with, but yet again we have politicians distorting the truth. Why does Mr Pickles give misleading statements. As per the audit commission "Around half of pensions in payment are below 3,000 pounds a year" so why does Mr Pickles have to make statements about cost being added to council tax bills/ this is factualally incorrect!
Do these politicians think that the people who work in local govt are different to people who don't, are we 2nd class citizens? We are getting up, going to work, doing a hard days work and trying to get on with our lives the best we can. When will the this Govt realise that they are making a millions of people who provide basic services to in Local Govt , police, fire and health feel totally worthless. Shame on you Mr cameronclegg and all your yes men.
Unfortunately the media are pandering to this smoke screen as well. My local paper in reporting on this failed to mention the quote I have mentioned above. What a sad world we live in when popular politics and sensational news stories that missrepresent the facts and alienate a large section of the country mean more than truth.
r griffiths
29th Jul 2010 at 6:27 pm
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