UK - Local authority schemes are shifting the burden of their fund deficits on to council tax payers in a £500m bill.
West Sussex County Council Pension Fund – nominated by the Local Government Association to calculate the bill – said the figure will be raised over the next three years. This will boost local authority schemes’ funding levels to the 100% required for all public sector schemes, the council claims.
But Hymans Robertson research partner Douglas Anderson disagreed and warned that the increased contributions will fail to solve the local authority funding crisis.
Anderson said that the funding levels of local authorities are affected more by investment returns than contribution rates.
He added: “Upping council tax rates by the amount indicated will make no difference.”
West Sussex County Council Pension Fund director of resources Helen Kilpatrick said that over three quarters of all local authority schemes are underfunded and will, on average, need an extra £2m a year over the three years.
WM Company head of client consulting Eric Lambert warned that the reliance by local authorities on council tax payers is “likely to be a rising trend”.
London Borough of Bromley Pension Scheme administrator Kevin Reeves said the fund was forced to raise council tax in April to boost the scheme’s 70% funding level. But he insisted that the council tax burden was not that extreme when spread across all taxpayers.
Local authorities have blamed volatile market conditions and increased longevity for pushing funding levels down. But NAPF investment director David Gould insists the public sector has an unfair advantage over its private sector peers.
He said: “The public sector has an unfair advantage over the private sector pension funds because it always has the taxpayer to fall back on.”
Among the lowest funded local authorities are Kent County Council Superannuation Fund, which has a £519m shortfall – £175m worse than its previous triennial valuation. Surrey County Council Pension Fund’s valuation also holds a £328m deficit.
West Sussex, which has a £125m deficit, was forced to increase council tax rates to raise an extra £1m to boost the scheme’s funding level.
• Councillors given access to LGPS, see back page
The registration deadline for the Workplace Savings & Benefits Awards 2019 is today.
This week's top stories were the DWP giving the green light to CDC and TPR granting extensions for 11 master trust authorisation applications.
Susan Martin says building strong foundations for business are the only way forward as the pensions industry is radically shaken up
The Pensions Regulator (TPR) has granted Now Pensions a six-week extension for its master trust authorisation application after the 31 March deadline, PP can reveal.