UK - A council's decision to use property sale receipts to plug its pension fund deficit has ignited a vicious row between councillors.
Elmbridge Council has paid £17.5m in property sales into the £1bn Surrey County Council pension scheme. And the Residents’ Association-controlled Elmbridge Council is planning another £3m contribution next year.
But the decision has been attacked by Conservative councillors.
Esher and Walton Conservative Association counsellor Tim Oliver said: “This is a very bad decision – £17m of the money that Elmbridge received from the sale of its social housing stock has now been poured into the pension fund.
“At the same time, the council needs a substantial sum of money for its new leisure centre.”
But a council spokesman said: “The residents’ group said it was better to put as much money in when the market was low; then hopefully, the liability we will have will not be as bad as the actuary is predicting.”
The council’s decision to deposit another £6m into the scheme, £3m of which has already been transferred, was based on the attempt to save residents a 2.1% increase in council tax, on top of the 20% already being proposed.
The spokesman added that whether the council chooses to pay the money into the scheme using the proceeds of property sales or council tax is “irrelevant” because the statutory obligation to pay the money into the scheme still exists.
In January it was revealed that a total of 41 English councils, representing 16 pension funds, had been allowed to use the proceeds from property sales to plug scheme deficits.
The Pension Protection Fund (PPF) is consulting on proposals to charge a "risk reflective" levy for commercial defined benefit (DB) consolidation vehicles.
The funding gap across FTSE 350 schemes could be slashed by as much as £275bn if schemes look beyond traditional ways of creating value. Victoria Ticha examines how
There will be "many flavours" of defined benefit (DB) consolidators but consolidation will only be the right answer for a minority of schemes, Alan Rubenstein says.
Work and Pensions Committee (WPC) chairman Frank Field has questioned the regulator on what lessons it can learn from the experience of the Kodak Pension Plan No.2 (KPP2).