Your bill for council tax pensions set to soar

Birmingham town hallVictoria Jones/Press Association Images

While you struggle to scrape together a few pennies to save for your own retirement, you're simultaneously pouring thousands into pensions for council workers, and figures from the TaxPayers' Alliance have revealed that your bill for these pensions is set to soar even further.

Already, £1 of every £5 you pay in council tax is siphoned off to keep someone else in their retirement, and this is going to rise still further. So just how bad are things going to get, and which councils are worst?

Black hole

The TPA has found that council pension schemes around the country are running at a deficit of a heart-stopping £54 billion. The problem is that these schemes promise an income in retirement, so bear all the risks of people living longer and investments performing poorly. As longevity and investment performance are both working against the councils, this black hole has opened up.

There's a forlorn hope that at some point investments will pick up and close the gap, but there's every likelihood that continued increases in longevity will mean there's still a mountain to climb. At the moment, under the current generous arrangements, the only people who are going to close this gap are taxpayers.
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Worst offenders

So which councils are in the worst position, and which taxpayers are likely to feel the pressure? There are plenty of them. Some 14 local authorities had a deficit over £500 million in 2010-11, and 165 local authorities had deficits in excess of £100 million.



Birmingham City Council had a deficit of £1.3 billion, the biggest deficit in 2010-11 and the only council with a deficit of more than £1 billion. This is £1,292 per head of Birmingham's population. The highest deficit per head of population in England is in Brent Council, with £2,267 per head, followed by Gateshead Council with £2,040.

The local authority in Scotland with the largest deficit in 2010-11 was Glasgow City Council with £625 million. This is £1,054 per head of Glasgow's population. But the highest deficit per head of the local population in Scotland is Dundee City Council at £1,565 each.

The local authority in Wales with the largest deficit in 2010-11 was Cardiff City Council with £494 million. This is £1,450 per head of Cardiff's population. But the highest deficit per head of the local population in Wales – and the entire UK – is Merthyr Tydfil Council, with a pension deficit of £2,268 per head.

The local authority in Northern Ireland with the largest deficit in 2010-11 was Belfast City Council with £74 million. This is £274 per head of Belfast's population, the highest deficit per head of population.

The answer

The TPA is calling for urgent reform to these pensions, to make the promises less generous and make council workers themselves stump up more of the cash for their own retirement.

Matthew Sinclair, Director of the TaxPayers' Alliance, said: "The deficit in the Local Government Pension Scheme remains a ticking time bomb that's being left for future generations of taxpayers to deal with. With an ageing population and a crisis in the public finances, generous final salary schemes like the LGPS are inflexible and too expensive, and need urgent reform. Councils should not take false comfort in the improvement in the stock market. Their pension liabilities continue to far outweigh their assets and the situation remains worse than two years ago."

Of course, in the short-term this means every likelihood of industrial action. So taxpayers will be forking out a small fortune for the pensions of people who refuse to work for them in return.

So what do you think? Are you happy to keep paying? Are these pensions fair, or do we need reforms? Let us know in the comments.

10 PHOTOS
Top 10 council deficits
See Gallery
Your bill for council tax pensions set to soar

£1.34 billion

£718 million

£650 million

£633 million

DH 5

£629 million

£625 million

£582 million

£568 million

S 4, 9, 11, 13-14, 60-61

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Top 10 deficits per head

Merthyr Tydfil, £2,268
Brent £2,267
Rhondda, Cyon, Taff £2,063
Gateshead, £2,040
Neath Port Talbot, £2,001
Hackney, £1,931
Hammersmith and Fulham, £1,899
Newham, £1,718
Blaenau Gwent, £1,708
Lambeth, £1,660

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