UK - Local authority pensions costs will soar if firefighters win their battle for a 40% pay rise, Hymans Robertson warns.
The consultant said that as the firefighters’ pension scheme was unfunded and based on only 30 years’ service, the effect of such a rise could be dramatic.
Hymans Robertson said the impact of the higher pension on cash expenditure would take a few years to filter through as current employees gradually retired.
However, the consultant added that under the new FRS17 accounting standard, the impact of the pay rise on future pensions costs would be reflected immediately as a bigger liability in local authorities’ balance sheets.
The Fire Brigades Union is preparing to ballot members on strike action after they rejected a 4% pay offer by local authorities at the beginning of the year.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.