The TPA found the assets of all 101 local authority pension funds in the UK are dwarfed by their liabilities, creating a deficit which taxpayers are ultimately liable for.
The Local Government Pension Scheme (LGPS) is “much more generous than most private sector pensions and is in urgent need of reform”, according to the TPA. Previous TPA research has found that the equivalent of £1 in every £5 of Council Tax was spent on employer contributions to the LGPS.
The research also found 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.
Fourteen local authorities had a deficit over £500 million in 2010-11, and 165 local authorities had deficits in excess of £100 million.
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 wasBelfast City Council with £74 million. This is £274 per head of Belfast’s population, the highest deficit per head of population.
Across London’s 32 Borough Councils plus the City of London and the Greater London Authority the total combined deficit was over £9 billion. This is one sixth of the overall deficit across all UK schemes.
The news came after the Financial Times revealed on Tuesday that proposals for a pooled fund with up to £30bn of assets were being discussed by the Local Government Association, London councils and the London Pension Funds Authority.
It is thought this could slash £30 million from annual administration costs for London’s 32 boroughs and potential partners such as the City of London Corporation and Transport for London.
Katja Hall, CBI chief policy director, said: “These discussions are a welcome move, as pooling local government pension funds would not just reduce administrative costs it would also inject some much-needed investment into Britain’s ageing infrastructure, which is crying out for capital.
“Pension funds are natural investors in infrastructure and will want to invest in projects that are designed to give returns, so we now need to see other public sector funds coming forward in this way.”
