The BBC report a survey of local authoriy pension funds by John Ralfe – which concludes the deficit has now reached £100 billion. Liabilities have soared. Just three years ago the deficit was £42 billion.
The Local Government Pension Scheme in England has four million members including 1.7 million people currently working. The one scheme covers 81 regional pension funds. So far as I can tell there is little that an individual local authority can do about the problem.
The BBC adds:
According to Mr Ralfe, the value of assets in the scheme have risen just 8% in the past three years, to £132bn, whereas liabilities have soared 41% to £232bn.
This increase in liabilities has been caused by a number of factors, including a rise in the value of benefits for local authority staff, and a fall in interest rates.
In future, the scheme will be uprated in line with the Consumer Prices Index – a generally lower measure of inflation than the Retail Prices Index.
Mr Ralfe estimates that will save £20bn, but he believes that taxpayers and scheme members will have to pay more into local authority pensions – some £4bn extra a year.
However, Mr Ralfe says that the official actuarial deficit which the scheme will unveil next spring will be considerably lower, because it is allowed to use much less conservative valuation methods than
private sector schemes.