Council pensions 'in peril'

Thursday, 29 July 2010 12:01 AM

By politics.co.uk staff

Present arrangements for local authority pensions are not sustainable, the Audit Commission has warned.

A report by the public sector spending watchdog warned of a "growing mismatch" between growing liabilities and the resources available to fund them.

It stated that the local government pension scheme in England, which with 1.7 million active members is the largest public sector pension scheme by membership, faces a potential crisis as investments from local funds have failed to deliver the anticipated returns.

"Media reports about generous public sector pensions distort the picture," Audit Commission chief executive Eugene Sullivan said.

"Local government employers already pay much more into the LGPS than employee members, and without corrective action the gap will widen.

"The scheme can't continue as it is. Unfunded liabilities are being deferred, and this is storing up problems for the future."

Around half of pension payments under the scheme are less than £3,000 a year, reflecting the high proportion of part-time and low-paid members.

Former work and pensions secretary John Hutton has been tasked with reviewing the affordability public sector pensions. His commission will produce its initial findings in September.

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• domestic policy
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• pensions
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• welfare and pensions