Councils’ pensions shortfall is a ‘ticking timebomb’ (From Hampshire Chronicle)

Councils’ pensions shortfall is a ‘ticking timebomb’

3:17pm Thursday 11th March 2010 in

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PEOPLE across Hampshire could face higher council tax to plug a black hole in local government pensions which has soared to £1.7bn.

Annual accounts for Hampshire County Council, Portsmouth and Southampton city councils and each of the 11 district councils show the combined pensions deficits have increased by 67 per cent in just one year.

Campaigners have described the issue as a “huge ticking timebomb”, and called for an overhaul of the system.

Hampshire County Council had the sixth largest pensions deficit of any local authority in the UK — £727m in 2008-9, according to figures compiled by the Taxpayers’ Alliance.

The county also saw the second biggest increase in pensions deficit compared to the year before — £287m.

Meanwhile, district council pension deficits ranged from £22m to £61m.

Last summer the Hampshire Chronicle revealed how the Hampshire Pension Fund deficit — which includes the 14 local authorities — had rocketed, after £687m was wiped off the value of investments, including £7m lost in the jailed Bernard Madoff swindle.

More than 46,000 workers and 27,000 pensioners belong to Hampshire Pension Fund.

The last three-yearly formal valuation in 2007 showed a £891m gap between what the total fund is worth and what it will have to pay out in future.The next is due this month.

Since the scheme is part-funded by employer contributions — in effect money from taxpayers — homeowners could again be asked to help plug the gap.

John O’Connell, of the Taxpayers’ Alliance, described council pension deficits as “a huge ticking timebomb”.

He said: “Investment portfolios will have taken a beating in the credit crunch, but that is only part of the problem.

“No matter how good the markets get, the inescapable fact is that local authorities are running unsustainable final salary schemes that are now all but extinct in the private sector.”

Cllr Ken Thornber, the leader of Hampshire County Council, said it was “no surprise” that the county council had one of the biggest pension deficits, as it was the third largest county council in the country.

He said more money was still being paid into the fund than was being paid out in benefits.

He said the Taxpayers’ Alliance should lobby MPs if it wanted reform, as the Local Government Pension Scheme is determined by Government, not local councils.

Cllr Thornber added: “It may well be that it is time for a national debate on the issue.”

In addition to the local authorities, civilian workers from the police and fire authorities, staff from Southampton Solent University and University of Portsmouth, plus dozens of smaller bodies and charities are included in the Hampshire Pension Fund.