Birmingham City Council accounts reveal £1.4bn DB deficit

Birmingham City Council has disclosed a defined benefit scheme deficit of £1.4bn in its latest set of accounts.

According to the report the local authority's pension liabilities stand at £4.1bn but assets, as of 31 March this year, were £2.7bn.

However, the council said it had seen a reduction in the scheme deficit due to the government's switch from RPI to CPI for public sector pension indexation. It said it liabilities in the West Midlands Pension Fund had been cut by £248.4m.

The accounts said: "There is currently a net shortfall that will be reviewed periodically by the West Midlands Metropolitan Authorities actuary and steps will be taken to address the shortfall."

The council said while the figure is "substantial" it should be remembered that the deficit does not have to be cleared immediately and other large schemes were in a similar position.

The report added: "The total liability of £1406m has a substantial impact on the net worth of the authority. However, statutory arrangements for funding the deficit means that the financial position of the authority remains healthy."

It confirmed the deficit would be "made good" by increased contributions from employees.

The fund, administered by the West Midlands Pension Fund, is part of the Local Government Pension Scheme. The council said it would contribute £91.2m to the fund in the year to 31 March, 2012.